Preamble

The House met at half-past Two o'clock

PRAYERS

[MR. SPEAKER in the Chair]

NEW WRIT

For Tyne Bridge, in the room of Harry Lowes Cowans, Esquire, deceased.—[Mr. Foster.]

AUTUMN STATEMENT 1985

Ordered,
That a copy of the Chancellor of the Exchequer's Autumn Statement 1985 be laid before the House.—[The Chancellor of the Exchequer.]

Mr. Speaker: I call the First Deputy Chairman of Ways and Means to move the eight motions in his name.

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Date when Closure claimed, and by whom
Question before House or Committee when claimed
Whether in House or Committee
Whether assent given to Motion or withheld by the Chair
Assent withheld because, in the opinion of the Chair, a decision would shortly be arrived at without that Motion
Result of Motion and, if a Division, Numbers for and against

and (2) in the Standing Committees under the following heads:—

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Date when Closure claimed, and by whom
Question before Committee when claimed
Whether assent given to Motion or withheld by the Chair
Assent withheld because, in the opinion of the Chair, a decision would shortly be arrived at without that Motion
Result of Motion and, if a Division, Numbers for and against

DELEGATED LEGISLATION

Return ordered,
of the number of Instruments considered in Session 1984–85 by the Joint Committee and the Select Committee on Statutory Instruments respectively pursuant to their orders of reference, showing in each case the numbers of Instruments subject to the different forms of parliamentary procedure and of those within the Committees' orders of reference for which no parliamentary procedure is prescribed by statute, and the numbers drawn to the special attention of the House or of both Houses distinguishing the ground in the Committees' orders of reference upon which such attention was invited; and of the numbers of Instruments considered by a Standing Committee on Statutory Instruments, &amp;c., and by the House respectively, in Session 1984–85, showing the number where the question on the proceedings relating thereto was put forthwith under Standing Order No. 79(5).—[The First Deputy Chairman of Ways and Means.]

PRIVATE BILLS AND PRIVATE BUSINESS

Return ordered,

CLOSURE OF DEBATE UNDER STANDING ORDER No.31

Return ordered,
respecting applications of Standing Order No. 31 (Closure of debate) during Session 1984–85, (1) in the House and in Committee of the whole House, under the following heads:—

—[The First Deputy Chairman of ways and Means.]

of the number of Private Bills, Hybrid Bills and Bills for confirming Provisional Orders introduced into this House and brought from the House of Lords, and of Acts passed in Session 1984–85;

Of all Private Bills, Hybrid Bills and Bills for confirming Provisional Orders which in Session 1984–85 were reported on by Committees on Opposed Bills or by Committees nominated partly by the House and partly by the Committee of Selection, together with the names of the selected Members who served on each Committee; the first and also the last day of the sitting of each Committee; the number of days on which each Committee sat; the number of days on which each selected Member served; the number of days occupied by each Bill in Committee; the Bills of which the Preambles were reported to have been proved; the Bills of which the Preambles were reported to have been not proved; and, in the case of Bills for confirming Provisional Orders, whether the Provisional Order ought or ought not to be confirmed;

Of all Private Bills and Bills for confirming Provisional Orders which in Session 1984–85 were referred by the Committee of Selection to the Committee on Unopposed Bills, together with


the names of the Members who served on the Committee; the number of days on which the Committee sat; and the number of days on which each Member attended;

And of the number of Private Bills, Hybrid Bills and Bills for confirming Provisional Orders withdrawn or not proceeded with by the parties, those Bills being specified which were referred to Committees and dropped during the sittings of the Committee.—[The First Deputy Chairman of Ways and Means.]

PUBLIC BILLS

Return ordered,
of the number of Public Bills distinguishing Government from other Bills, introduced into this House, or brought from the House of Lords, during Session 1984–85 showing:

(1) the number which received the Royal Assent, and
(2) the number which did not receive the Royal Assent, indicating those which were introduced into but not passed by this House, those passed by this House but not by the House of Lords, those passed by the House of Lords but not by this House, those passed by both Houses but Amendments not agreed to; and distinguishing the stages at which such Bills were dropped, postponed or rejected in either House of Parliament, or the stages which such Bills had reached by the time of Prorogation.—[The First Deputy Chairman of Ways and Means.]

SELECT COMMITTEES

Return ordered,
of Select Committees, except Business Committees, in Session 1984–85, with the Sub-Committees appointed by them; the number of the meetings of each and the number of meetings each Member attended; and the number of Members who served on Select Committees; together with the total cost (estimated where necessary) in respect of each Select Committee and Sub-Committee for the financial year 1984–85 of:—the attendance of witnesses; overseas visits; visits within the United Kingdom; specialist advisers' remuneration and expenses respectively, and other work commissioned; entertainment; the preparation for publication of the Minutes of Evidence; and printing and publishing; with so much of the same information as is relevant to the Chairmen's Panel and the Court of Referees.—[The First Deputy Chairman of Ways and Means.]

SITTINGS OF THE HOUSE

Return ordered,
of the days on which the House sat in Session 1984–85 stating for each day the day of the month and day of the week, the hour of the meeting, and the hour of the adjournment; and the total number of hours occupied in the sittings of the House, and the average time; and showing the number of hours on which the House sat each day, and the number of hours after the time appointed for the interruption of business.—[The First Deputy Chairman of Ways and Means.]

STANDING COMMITTEES

Return ordered,
for Session 1984–85, of (1) the total number and the names of all Members (including and distinguishing Chairmen) who have been appointed to serve on one or more of the Standing Committees showing, with regard to each of such Members, the number of sittings to which he was summoned and at which he was present; (2) the number of Bills, Estimates, Matters and other items referred to Standing Committees pursuant to Standing Order No. 79 (Standing Committees on Statutory Instruments, &amp;c.) or Standing Order No. 80 (Standing Committees on European Community documents) considered by all and by each of the Standing Committees, the number of sittings of each Committee and the titles of all Bills, Estimates, Matters and other items as above considered by a Committee, distinguishing where a Bill was a Government Bill or was brought from the House of Lords, and showing in the case of each Bill, Estimate, Matter and other item, the particular Committee by which it was considered, the number of sittings at which it was considered and the number of Members present at each of those sittings.—[The First Deputy Chairman of Ways and Means.]

SPECIAL PROCEDURE ORDERS

Return ordered,
of the number of Special Procedure Orders presented in Session 1984–85; the number withdrawn; the number annulled; the number against which Petitions or copies of Petitions were deposited; the number of Petitions of General Objection and for Amendment respectively considered by the Chairmen; the number of such Petitions certified by the Chairmen as proper to be received, and the number certified by them as being Petitions of General Objection and for Amendment respectively; the number referred to a Joint Committee of both Houses; the number reported with Amendments by a Joint Committee, and the number in relation to which a Joint Committee reported that the Order be not approved and be amended respectively; and the number of Bills introduced for the confirmation of Special Procedure Orders;
Of Special Procedure Orders which, in Session 1984–85, were referred to a Joint Committee, together with the names of the Commons Members who served on each Committee; the number of days on which each Committee sat; and the number of days on which each such Member attended.—[The First Deputy Chairman of Ways and Means.]

Oral Answers to Questions — SOCIAL SERVICES

Housing Benefit

Mr. McCrindle: asked the Secretary of State for Social Services how many of the representations he has received on the Green Paper on social security dealt with housing benefit.

The Minister for Social Security (Mr. Tony Newton): About 2,300, Sir.

Mr. McCrindle: Does my hon. Friend accept that the Green Paper proposals on housing benefit could lead to the withdrawal of housing benefit not only from many people who are on very small occupational pensions but from their widows? Does he agree that that would be a disincentive to thrift and that that is hardly the best background against which to sponsor the expansion of occupational pension schemes?

Mr. Newton: I hope my hon. Friend recognises that the effect of the structural proposals in the Green Paper depends upon the final decisions that are taken and the rates that are set within whatever structure may be proposed, including income support rates. We shall endeavour to ensure that we produce a fair position, but we have to take account of the fact that the purpose of encouraging the development of occupational pensions is to reduce, in the long run, people's dependence on means-tested benefits.

Mr. Carter-Jones: Will the Minister take any account at all of the representations that he receives?

Mr. Newton: I hope the hon. Gentleman will accept that the only real answer I can give to him is wait and see. However, we are studying very carefully what he has said. If he has any representations that he would like to make to me beyond those that he has already made, I shall look at them with unusual care.

Mr. Andrew Bowden: Will my hon. Friend bear in mind that many pensioners who now receive housing


benefit would not need to do so if the value of their savings had not been destroyed by inflation because of the policies of profligate Socialist Governments in the late 1970s?

Mr. Newton: I endorse my hon. Friend's every word.

Mr. Kirkwood: Does the Minister accept that suffering over housing benefit is being experienced by those in receipt of small occupational pensions and by widows? Does he also accept that the proposal to make a contribution towards rates is deeply worrying and distressing to many people who come within these income groups? Has he received many such representations, and will he consider them very carefully in the context of the White Paper?

Mr. Newton: We shall consider all the representations that are made to us, but part of the rates problem is due to the irresponsibility of local authorities, which are conscious that very large numbers of their electorate do not pay rates.

Mr. Pawsey: Can my hon. Friend say what is the current cost of housing benefit and what was its equivalent in 1979? Does he believe that this is a cost-effective way of delivering benefit to those in need?

Mr. Newton: The housing benefit scheme can be a more cost-effective and fairer way of helping those in need. We took an important step towards that by bringing together the two systems of help with housing costs in 1982 and 1983, but that is a system upon which we can improve, and we are seeking to do so.

Mr. Meacher: Will the Minister confirm that, under his housing benefit cuts, there will be 7 million losers, 4 million of whom will be pensioners, mostly owner-occupiers with small occupational pensions? Will the hon. Gentleman now answer the question that he has signally failed to answer: how do the Government justify their view that pensioners who are widows should now be deprived of housing benefit simply because their husbands were thrifty enough in their lifetime to save for a small private pension?

Mr. Newton: The outcome of the review obviously depends on the rates that are set and the final decision on the structure. We must bear in mind that one of the main burdens of the people to whom the hon. Gentleman has referred is, apart from the catastrophic rate of inflation over which the Labour Government presided, the extent to which this group is paying taxation. One of our objectives is to reduce the tax burden. I believe that it would be far better to leave widows and others with their own money in their own pockets than to take it from them and return it in the form of means-tested benefits.

Hospital Waiting Lists

Mr. Patrick Thompson: asked the Secretary of State for Social Services if he will make a statement on action being taken to reduce hospital waiting lists in East Anglia.

The Parliamentary Under-Secretary of State for Health and Social Security (Mr. Ray Whitney): The latest figures from the East Anglian region show that, in the 12 months to 30 September 1985, there was a reduction in the inpatient waiting list of 12 per cent. During 1984 the number of inpatient cases treated in the region increased

by 4 per cent. The regional health authority is continuing to take urgent action to reduce waiting lists and waiting times still further.

Mr. Thompson: I thank my hon. Friend for that encouraging reply. Is he aware that, although the numbers being treated are increasing and the numbers on waiting lists are coming down, far too many people are still on waiting lists for orthopaedic surgery, especially in the Norwich area? Will my hon. Friend do what he can to expedite the appointment of an extra consultant and to bring forward plans for a second acute hospital for the Norwich area?

Mr. Whitney: I certainly recognise that point. I understand that during the next financial year a new orthopaedic surgeon for the Norwich area will be appointed.

Mr. Tom Cox: rose—

Mr. Speaker: Order. This question is about East Anglia.

Mr. Cox: Is the hon. Gentleman aware that this matter is of concern not just to the Norwich area? Is he further aware that in the Peterborough area—

Mr. Speaker: Order. That is just the point.

Mr. Dobson: I think, Mr. Speaker, that Peterborough is in the East Anglia area.
The Under-Secretary of State may be pleased with the improvements in hospital waiting lists in East Anglia, but can he confirm that in half of the districts in East Anglia—Cambridge, West Suffolk, West Norfolk and Huntingdon—waiting lists have increased in the last six months? Is it not a fact that in Norwich—the hon. Member for Norwich, North (Mr. Thompson) is so proud of the improvements there—of 263 women waiting for urgent gynaecological treatment, 224 have been waiting for more than a month?

Mr. Whitney: If the hon. Gentleman consults the details put out by the East Anglia regional health authority, he will see that there has been a significant improvement. Of course, that improvement has been patchy. The regions recognise the need to concentrate on the weaker areas, and that is what they are doing. They have taken a number of steps following consultations with my hon. Friend the Member for Oxford, West and Abingdon (Mr. Patten), who previously occupied my post, to ensure that those improvements are put in hand.

Mr. Powley: Does my hon. Friend welcome, as I do, the appointment of a district general manager to the Norwich health authority and other district general managers in the East Anglia area? Does he agree that those appointments will undoubtedly secure the more efficient running of all the health authorities in East Anglia, and in other parts of Britain, which will result in a shortening of waiting lists and more efficient management of all the resources of the East Anglia health services?

Mr. Whitney: I am happy to agree with my hon. Friend. The post-Griffiths management structure, which is now being put into place, will show a remarkable return in terms of patient care for the significant increase in real spending that has been put into the NHS.

Limited List Prescribing

Mr. Latham: asked the Secretary of State for Social Services whether he will make a statement on the operation of the limited list for prescribing drugs under the National Health Service.

The Secretary of State for Social Services (Mr. Norman Fowler): The selected list scheme has been in operation since 1 April, and the scheme is running successfully.

Mr. Latham: Is my right hon. Friend aware that I am still receiving letters from constituents and their general practitioners complaining that they cannot get the drug that they need and saying that the National Health Service substitute is not satisfactory? Will he have another go at trying to persuade the British Medical Association to agree to a local appeal procedure?

Mr. Fowler: All the evidence that we have shows that the scheme has settled down. As my hon. Friend will be aware, we put forward proposals for an appeal mechanism for doctors. They were rejected by the General Medical Services Committee, which put forward no alternative. I shall, of course, bear in mind what my hon. Friend has said, but, on present evidence, I am not sure that any further action is required.

Dr. Roger Thomas: How many drugs has the Secretary of State allowed to be included on the limited list for each month since April 1985? What has been the reduction in the amount of savings expected? I appeal to him, once more, to place the new mucolytic drugs on the list.

Mr. Fowler: I cannot give the hon. Gentleman the detailed information that he requires. In general, we thought the savings on the drugs bill would be about £75 million a year, and that has proved to be the case. The hon. Gentleman will be aware that mucolytics were studied by the independent review committee. That committee made recommendations on two matters, but, in general, it said that they had no proven general therapeutic value in the treatment of chest conditions. We have accepted its independent advice.

Mrs. Virginia Bottomley: Does my right hon. Friend agree that to achieve continued improved patient care it is essential that we have an efficient and effective use of resources, such as the long overdue introduction of the limited list scheme?

Mr. Fowler: Yes. The scheme has proved to be a sensible way of saving money on the drugs bill and ensuring that extra resources go on the health services. The Government have sought to use the resources available to the National Health Service to the best effect. One of the results is that the NHS is now treating more patients that than at any time in its history.

Mr. Meadowcroft: Why does the Secretary of State allow the GMSC unilaterally to prevent other doctors from using the appeal procedure? Will he implement his offer to the doctors to allow those general practitioners who wish to prescribe by the appeal system to do so?

Mr. Fowler: In view of the history of the selected list and the controversy that it aroused in the medical profession, it seems rather foolhardy to seek to impose an appeal mechanism on the medical profession, which does not appear to want it.

Mr. Boyes: The Opposition said that the limited list would be a disaster, and that was an understatement. It is causing grave anxiety to patients, constituents and doctors. The Minister keeps saying that the list is working. Why does the lady at the other end of this Corridor keep sending letters to me saying that the Minister cannot reply to the complaints in less than three months because he is receiving too many letters about them? How can it be working in that case?

Mr. Fowler: The hon. Gentleman talks about statements that I have made. He has made a complete mis-statement of the position. Despite early controversy, the selected list has settled down, is working well and is producing sensible savings for the Health Service. I should have thought that that is what the hon. Gentleman would want to see.

Mr. Favell: Is my right hon. Friend aware that many general practitioners are delighted with the new selected list because they now find that the patients of their weak kneed brethren are no longer doing the prescribing? Instead, those doctors are prescribing the most cost-effective drugs.

Mr. Fowler: Opinion inside the medical profession on this issue has undoubtedly changed. Another benefit has been that some drug prices have come down appreciably as a result of the policy. Again, I should have thought that that was something that hon. Members on both sides of the House would want to see.

Mr. Pavitt: How many members of the limited list advisory and monitoring committee still have financial interests in the manufacture of drugs being prescribed? Is the Secretary of State satisfied that, with the number of members who have a financial interest, he is receiving disinterested advice?

Mr. Fowler: I am satisfied that it is an independent committee and that the advice being given is entirely disinterested and independent. I would not have set up the committee in any other way.

Contraception

Mr. Greenway: asked the Secretary of State for Social Services if he will now issue fresh guidelines to doctors regarding the prescription of oral contraceptives to girls below the age of consent.

The Minister for Health (Mr. Barney Hayhoe): The existing guidance is being reviewed, taking into account the detail of the House of Lords judgment and the wide range of views expressed on this issue.

Mr. Greenway: Is my right hon. Friend aware that the recent narrow Law Lords decision is highly damaging to family relationships and that it has virtually abolished the age of consent? It means that a few doctors will shell out the pill like jelly babies to very young girls. Will he issue guidelines seeking to restore the status quo ante the Law Lords decision?

Mr. Hayhoe: I do not accept the exaggerated comments of my hon. Friend. His comment about jelly babies is a slur upon the medical profession and upon others involved. As I have said, the existing guidance is being reviewed, taking acount of the Law Lords judgment and of other views that have been expressed.

Mrs. Renée Short: Is the Minister aware that the BMA has already issued careful guidance on this matter to all its members? We have no reason to doubt that the members of the BMA are adhering to that guidance. Bearing in mind that the overwhelming majority of girls who seek help from their general practitioner are already in a relationship, is it not better that they should get advice about how to avoid unwanted pregnancies, rather than bring into the world children they do not want and with whom they canot cope?

Mr. Hayhoe: The fact that the existing guidance stresses the quite exceptional circumstances in which doctors or family planning clinics should act in the way described underlines the importance of obtaining parental consent whenever possible. I found considerable support for the five Fraser points, if I may so describe them, contained in the House of Lords judgment. I hope that they will be reflected in the revised guidance that will follow the review.

Dame Jill Knight: Will my right hon. Friend resist what some may see as an automatic next step following the Law Lords decision—namely, a lowering of the age of consent? Will he bear in mind that young girls are just as much, if not more, in danger today than they were in Victorian times when the law came into effect?

Mr. Hayhoe: Questions about the age of consent are for my right hon. Friend the Home Secretary. I know of no proposal whatever to seek changes in the law to that effect. Hon. Members on both sides of the House will be concerned to see that the figures show that there were more than 4,000 abortions for girls under 16 in 1984, and equally concerned to see from the figures of the family planning clinics that 17,000 girls received advice and help, some without parental consent. Both those figures should generate concern on both sides of the House.

Hospital Hygiene

Mr. Alton: asked the Secretary of State for Social Services if he has any proposals to seek to improve hygiene in hospitals.

Mr. Hayhoe: In view of the importance of hospitals maintaining a good standard of hygiene, I have called for urgent action by health authorities concerned in response to recent criticisms of hospital kitchens. The scope for further measures is under urgent consideration.

Mr. Alton: I am grateful to the Minister for that reply. Given that 10 per cent. of patients acquire infectious diseases while resident in hospital, and in view of recent critical reports of wards and hospital kitchens, does the Minister not think that it is time hospitals were excluded from the exemption from prosecution which they currently enjoy?

Mr. Hayhoe: I certainly recognise the concern of those who pick up infections in hospital. The first priority must be to take action to deal with dirty, bug-infested kitchens or other areas in hospitals. As I have indicated, the matter of Crown immunity is being considered.

Mr. Cash: In view of the recent experience of legionnaire's disease in Stafford, and now again in Glasgow, will my right hon. Friend assure me that proper measures are being taken to ensure that matters of this kind are adequately covered in future?

Mr. Hayhoe: Guidance has already been issued concerning legionnaire's disease. I think that the whole House would wish to express its concern and sympathy and condolences to the relatives of those who have been affected by the outbreak in Glasgow. This is a matter primarily for my right hon. Friend the Secretary of State for Scotland.

Mr. Ashley: Is the Minister aware that surveys show that 60 per cent. of National Health Service hospitals have food hygiene standards below the Government's food hygiene regulations, and that 16 per cent. would warrant prosecution were it not for Crown immunity? When I took a deputation to the Minister recently asking for the abolition of Crown immunity, I gained the impression, rightly or wrongly, that he was deterred by the financial considerations. Has the Minister made any costing of the abolition of Crown immunity? If so, what costing has he made?

Mr. Hayhoe: The right hon. Gentleman must have come to the meeting with his delegation already under that impression, because nothing that I said to him when we met at the House a while ago could have sustained such an impression in his mind. I have indicated that matters connected with Crown immunity are under consideration. A general change in Crown immunity would require primary legislation.

Mr. Stern: Will my right hon. Friend reject the big bang theory that would be involved in the abolition of Crown immunity, and at the same time provide opportunities for those in charge of hospitals and other public buildings to reassure the public of the generally very high standards of hygiene that currently exist?

Mr. Hayhoe: That would generally be true. I repeat that Crown immunity should not and must not be used by those responsible for deferring or postponing action to deal with unhygienic conditions.

Mr. Craigen: With the further deaths in Glasgow from legionnaire's disease, how closely is the Minister working with his colleagues in Scotland and Wales to combat this insidious problem?

Mr. Hayhoe: As I think the hon. Gentleman knows, there is an inquiry into the whole matter. That inquiry, which has already produced an interim report, will be looking very carefully at any lessons that can be learnt from the unfortunate and tragic occurrence in Glasgow.

Resource Allocation

Mr. Freeman: asked the Secretary of State for Social Services what basis of population statistics is used for the calculation of allocation of resources to regional health authorities.

Mr. Hayhoe: Resources are allocated to regional health authorities using broadly the methods recommended by the resource allocations working party. However, the basis of population statistics has been revised and from 1985–86 onwards allocations are calculated on the basis of population projections for the year of allocation, rather than on the population estimates for past years as recommended by the working party. This new approach is thus more sensitive to the needs of regions with rapidly growing or declining populations.

Mr. Freeman: I am most grateful to my right hon. Friend for his answer. It will be good news to growing regions, such as the Oxford health region, in which my constituency, Kettering, lies.
Will my right hon. Friend undertake to look at the morbidity rates which are used in the RAWP formula for the allocation of resources between the different regions of the country?

Mr. Hayhoe: I gladly give that undertaking, and with my Treasury experience behind me, I add "with no commitment."

Mr. Loyden: In addition to the criteria that the Minister uses in terms of population, what consideration is being given to the incidence of diseases in certain regions, particularly those with high unemployment and poverty?

Mr. Hayhoe: There are several complicated matters of which account is taken in the allocation of resources. I shall write to the hon. Gentleman, giving him full details.

Mr. Kennedy: Is the Minister basically satisfied that the RAWP formula can work at a time of economic recession, which the National Health Service is having to shoulder?

Mr. Hayhoe: "Recession" is a curious word to use when, over the lifetime of the Government, there has been a growth in resources in real terms of over 20 per cent.

Sick Pay

Mr. John Mark Taylor: asked the Secretary of State for Social Services if he will make a statement on the minimum hours and earnings threshold for entitlement to statutory sick pay.

The Parliamentary Under-Secretary of State for Health and Social Security (Mr. John Major): The earnings threshold for entitlement to statutory sick pay is the same as that governing liability to pay national insurance contributions, currently £35·50 a week. There is no qualifying rule about a minimum number of hours.

Mr. Taylor: I congratulate my hon. Friend on his first appearance on the Front Bench to answer questions. I thank him for his reply. Can he comment on the circumstances of an older employee in my constituency on £35 per week, but with some savings, who finds himself ineligible either for unemployment benefit or for sickness pay?

Mr. Major: I am grateful to my hon. Friend for his kind words. In the case of the man that he mentioned, if his earnings are below £35.50 he will have no entitlement to statutory sick pay. He may, of course, have an entitlement to sickness benefit, which would depend on his previous national insurance contributions. If, however, he falls outside statutory sick pay and state sickness benefit, he may have a residual entitlement to supplementary benefit.

"Reform of Social Security"

Mr. Yeo: asked the Secretary of State for Social Services how many representations he has received regarding his Green Paper "Reform of Social Security."

Mr. Fowler: Over 7,000, Sir.

Mr. Yeo: Is my right hon. Friend aware that the arguments for reforming the social security system, that is the need to simplify it and to make it more cost-effective, are just as strong today as they were when he commenced his reviews 18 months ago? Accordingly, will he undertake not to be dissuaded from achieving those twin objectives in the forthcoming White Paper by the representations that he may have received?

Mr. Fowler: Indeed, in the responses to the consultative paper very few people are saying that social security should not be reformed. The question is not whether, but how, it should be reformed. We have set out our proposals in the Green Paper. We look forward at some stage to the hon. Member for Oldham, West (Mr. Meacher), who leads for the Opposition, having the courage to set out his proposals.

Mr. Pike: Can the Secretary of State give the House the assurance that he will take note of the representations from people, particularly women and manual workers, who feel that they will suffer considerably when SERPS is either phased out or abolished? They are the people who stand to lose most. Will he give an assurance that he will safeguard their position?

Mr. Fowler: I certainly give the assurance that I will consider the responses on the state earnings-related pension scheme, but again the hon. Gentleman has to accept that, with the exception of the eccentric hon. Member for Oldham, West, virtually no one outside the House says that SERPS should stay as it is at the moment.

Sir William Clarke: Does my right hon. Friend agree that the main danger to private pension schemes would arise if, in the future, the investment in pension funds were directed into a national investment bank? Would that not jeopardise the millions of private pensioners? Surely that must lead to the conclusion that under no circumstances must the Labour party be allowed to implement that policy.

Mr. Fowler: My hon. Friend is absolutely right. The policy put forward by the Labour party on a national investment bank and on pensions is totally against the interests of occupational pensioners. The message should go out that those proposals would damage occupational pensions and the interests of occupational pensioners.

Mr. Hugh Brown: In the light of the volume and content of the representations so far received, when the Government produce their White Paper, will one option be to reconsider the whole process until they have a mandate from electors?

Mr. Fowler: We shall put forward the proposals in the White Paper on the basis of what is set out in the Green Paper and the result of the consultation process. It is right to consult the public on the proposals, but we also believe strongly that now is the time to take action on reforming social security.

Mr. Colvin: Does my right hon. Friend acknowledge, as Lord Beveridge did, the value of voluntary organisations working within the welfare state to provide services for those in need? Will he give serious consideration to continuing the "Opportunities for the Volunteering" scheme when it expires at the end of next March?

Mr. Fowler: That has been a successful scheme. I shall want to consider it in the light of its success and of what my hon. Friend has said.

Mrs. Beckett: Will the Secretary of State confirm that among the many representations that he has received, some of the greatest concern has been expressed at his proposals for the social fund, which—in demanding that his staff choose whom they will help from many who have proven need—not only put his staff in the firing line, but return us straight to the Victorian concept of the deserving and undeserving poor?

Mr. Fowler: The hon. Lady is entirely wrong about that. She should read what the Social Security Advisory Committee says about that in its entirety. As I think the hon. Lady understands, the present supplementary benefit system, which employs about 40,000 staff trying to administer it, is in danger of breaking down because of the organisation and structure of supplementary benefit. We have proposed a sensible way forward, which enables the position of individual claimants to be better and properly considered.

Economic Deprivation

Mr. Stan Thorne: asked the Secretary of State for Social Services what action he intends to take in regard to alleviating poorer people's economic deprivation in the near future.

Mr. Major: The Government are pledged to protect the retirement pension and associated long-term benefits against rising prices, and have successfully done so. Ultimately, however, improvements in living standards depend upon economic growth and the control of inflation.

Mr. Thorne: Does not imposing additional charges, partly through rates and mortgages, on those in receipt of supplementary benefit create further hardship for those who are already deprived?

Mr. Major: We believe that ultimately the best way to deal with these matters is to put money in people's pockets so that they may meet the charges. The hon. Gentleman picks a curious time to raise that criticism. He will be aware that a substantial uprating of benefits of around 7 per cent. is taking effect later this month.

Mr. Forth: Does my hon. Friend agree that the object of the review of social security is to ensure that benefits go to those most in need, and that the success of the review will be judged against that criterion?

Mr. Major: My hon. Friend is right. The White Paper which my right hon. Friend the Secretary of State will introduce shortly will set out the system which, we believe, will direct resources to those who most need them. I think that that will be a welcome innovation.

Mr. Alfred Morris: The Secretary of State was studiedly uncommunicative yesterday, as he has been today, about his detailed intentions for the future of SERPS. Can the Minister give a categorical assurance that there is no intention of amending SERPS so as to drop the rule under which every individual's pension is based on his or her best 20 years' earnings? Is he aware of the importance of that rule to very large numbers of severely disabled people and of the concern about its future among the organisations of the disabled?

Mr. Major: The right hon. Gentleman says that my right hon. Friend the Secretary of State was uncommunicative yesterday. That may or may not have been so, but I have nothing to add to what he said.

Board and Lodging Allowance

Mr. Favell: asked the Secretary of State for Social Services if he will make a statement on board and lodging allowances for under-25-year-olds.

Mr. Newton: I refer my hon. Friend to the announcement made by my right hon. Friend the Secretary of State in his speech to the House yesterday.

Mr. Favell: Will my hon. Friend remind the House of the amount of the allowance? Will he tell the House what happens when a young person on the allowance finds a job, which he reports to the social security office?

Mr. Newton: The current limits on board and lodging payments range from £45 a week in some areas to £70 a week in others, to which must be added the personal expenses allowance of just under £10. The plain fact is, I am afraid, that that means that large numbers of young people could not afford to pay for the same accommodation if they were in work, which is thoroughly unsatisfactory and one reason why we have taken action.

Mr. Frank Field: Does the Minister recall that it was a constituent of mine who took the Government to court, when the old regulations were ruled unlawful? As experts have already commented that the new regulations will probably meet a similar fate, will the Government withdraw them and come back to the House with primary legislation?

Mr. Newton: I see no reason to withdraw the regulations that have just been laid, because, as I understand it, they meet exactly the points that were raised in the High Court case. The basis of that court case was that the board and lodging limits and the time limits, had they been specified in the regulations, would have been lawful. That is the basis on which we have acted.

Mr. Fletcher: Is my hon. Friend aware that his swift action in investigating severe overcrowding and allegations of lodging allowance fraud in Edinburgh has been warmly welcomed by my constituents? Would it not be helpful to the recipients of lodging allowances and the taxpayer, as well as eliminating racketeering, Rachman-like landlords, if a simple form of local licensing were introduced for the premises concerned?

Mr. Newton: My hon. Friend will understand that I cannot speak so readily for the position in Scotland, but local authorities in England and Wales have power to take steps to license houses in multiple occupation, and we encourage them to use that power. The point that concerns me is that we must ensure that the social security system does not virtually encourage the kind of exploitation and abuse about which he is rightly concerned.

Mr. Meacher: Will the Minister recognise that it is wholly invidious to expect Members of Parliament to vote on new board and lodging regulations which are now effectively sub judice? Is it not also improper for the Government to try to presume upon the decision of the Court of Appeal, especially since they have twice now been forced to back down because of-illegalities? Will he


say why the Secretary of State is so obsessed with pursuing tiny amounts of alleged board and lodging fraud, which he then fails to prosecute, when at the same time the Government are so lenient about tax fraud, now running on a scale at least 100 times greater?

Mr. Newton: The hon. Gentleman is doing both himself and his party a disservice in talking about tiny amounts of fraud, when it has been discovered in one of our local offices that over half those claiming benefit were not resident at the address for which they were claiming. If that is to be the approach of the Opposition, heaven help the social security bill which they will face if they ever get the chance to run the system.

Local Community Hospitals

Mr. Jessel: asked the Secretary of State for Social Services if he will make a statement on Government policy towards local community hospitals.

Mr. Whitney: Community hospitals make an important contribution to the National Health Service. Their place in the pattern of district services is primarily a matter for health authorities to decide, in consultation with others concerned at local level, including the public and medical practitioners.

Mr. Jessel: Will my hon. Friend look sympathetically at the need to retain St. Mary's hospital, Hampton?

Mr. Whitney: I recognise my hon. Friend's concern. I understand that the plans of the district health authority point to the possible closure of St. Mary's at some time in the next 10 years. I can assure my hon. Friend that, before any final decision is made, full cognisance will be taken of local opinion.

Mr. Steel: Will the Minister accept the need for a little more enthusiasm towards local community hospitals? Do they not provide excellent value for money and should he not be so financing the health boards that they are able to keep these hospitals open?

Mr. Whitney: We certainly accept the contribution that community hospitals make, but decisions of the effective deployment of local health services, including community hospitals, must be a matter in the first instance for the local health authority.

Dr. M. S. Miller: Before the hon. Gentleman makes rash promises about local community hospitals, will he ensure that all hospitals are fully equipped to deal with situations that need to be dealth with?

Mr. Whitney: The 20 per cent. increase in real terms in resources allocated to the National Health Service since we came to power means a steady improvement in the quality of service and equipment in our HNS hospitals.

Drug Prescriptions

Mr. Heathcoat-Amory: asked the Secretary of State for Social Services if he will seek reductions in the quantity of drugs prescribed by doctors.

Mr. Hayhoe: With the support of the British Medical Association, doctors are already encouraged to restrict the amount they prescribe on any one occasion, in the interests of both economy and safety. There is no evidence that amounts prescribed are generally excessive, but,

following the recent successful conference on prescribing, ways in which doctors may be further encouraged to prescribe both economically and effectively are being explored with representatives of the profession.

Mr. Heathcoat-Amory: Now that my right hon. Friend has restricted the range of drugs prescribed, will he look for the much greater savings to be made from reducing the huge quantity of drugs in circulation? Is he aware that hundreds of millions of pounds' worth of drugs a year are thrown away or wasted? Will he tell the House what practical steps he will take to make some doctors reform their wasteful prescribing habits?

Mr. Hayhoe: The prescribing habits of doctors are monitored, and the family practitioner committees have the power to go to those doctors who appear to be prescribing excessively and discuss the matter with them.

Blood Plasma

Mr. Shersby: asked the Secretary of State for Social Services if he will make it his policy to ensure that the United Kingdom is self-sufficient in the supply of blood plasma.

Mr. Hayhoe: The Government are already committed to achieving self-sufficiency in blood products. When the new plant at Elstree is fully commissioned by the end of 1986, the Department will ensure that regions collect enough blood plasma to achieve this.

Mr. Shersby: That reply will be warmly welcomed. However, what steps is my hon. Friend taking to encourage further blood donors to give their services?

Mr. Hayhoe: The fact of my hon. Friend having raised the matter today—which I endorse—will, we hope, help to encourage as many people as possible to come forward to offer their blood to the transfusion service.

Oral Answers to Questions — PRIME MINISTER

Engagements

Mr. Kennedy: asked the Prime Minister if she will list her official engagements for Tuesday 12 November.

The Prime Minister (Mrs. Margaret Thatcher): This morning I had meetings with ministerial colleagues and others. In addition to my duties in this House, I shall be having further meetings later today. I was present at Victoria station to meet the Emir of Qatar at the start of his state visit to this country, and this evening I shall attend the state banquet given by Her Majesty the Queen in honour of the Emir of Qatar.

Mr. Kennedy: Given the welcome news this morning that Lord Davidson, in the Court of Session in Edinburgh, ruled that the assets of the Trustee Savings Bank are indeed the property of the Scottish depositors, and given that my noble Friend Lord Taylor successfully moved an amendment to the Trustee Savings Banks Bill in another place on behalf of the alliance, seeking to protect those and other interests, will the Prime Minister confirm that the Government, in the light of that ruling, will not now seek to introduce any orders to name a vesting day?

The Prime Minister: We shall be considering the judgment very careful indeed, and will make a statement when we have done so.

Mr. Silvester: Is it not depressing that students at Manchester university should have attacked and abused the Minister of State, Home Office, my hon. and learned Friend the Member for Ribble Valley (Mr. Waddington)? Does my right hon. Friend agree that it is about time that people inside and outside universities stood up to be counted on whether they are prepared to defend the right of free speech?

The Prime Minister: Yes, I agree with my hon. Friend. Universities are places where, above all, free speech should be honoured, not prevented.

Mr. Steel: Reverting to Lord Davidson's judgment, may I ask the Prime Minister to give an assurance that, in her determination to press ahead with the privatisation programme, she will seek to sell only those items to which she has a valid title? Will she also undertake, in reviewing the judgment, to abandon the attempt to deprive the depositors of the TSB of their property?

The Prime Minister: The right hon. Gentleman seeks an instant reply to a judgment which we have not yet seen in full, but, obviously, the result of which we know. He must agree that it is better to see the judgment before commenting on it.

Mr. Dobson: asked the Prime Minister if she will list her official engagements for Tuesday 12 November.

The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.

Mr. Dobson: Will the Prime Minister tell the House which she thinks will contribute most to improving presentations and propaganda for the Tory party, her recent appointment of Lord Young as Secretary of State for Employment, or her earlier appointment of his brother, Mr. Stuart Young, as chairman of the governors of the BBC?

The Prime Minister: Those are excellent appointments.

Mrs. Kellett-Bowman: Will my right hon. Friend consider changes in the way in which accident compensation is awarded, so that people such as my constituents from St. Michael's, who received appalling injuries in the explosion at Abbeystead, and their dependants, who have already been waiting for 18 months without receiving a penny compensation, do not have to go through the courts to establish negligence so as to receive compensation?

The Prime Minister: I take note of what my hon. Friend says. I had the impression that the matter was still sub judice, but I shall consider it further.

Mr. Kinnock: The Prime Minister sought last night to give the impression that she is a recruit to renewal. Does that mean that her White Paper plans, published earlier this year, to cut expenditure in investment on construction, vehicles, plant and industrial support by 15 per cent. over the next two years have been abandoned? If it means that, we are delighted. If not, will she admit that last night she was up to her usual tricks of fabrication?

The Prime Minister: The right hon. Gentleman is talking nonsense. Had he listened to the replies that I have given from the Dispatch Box twice a week during almost every week the House has been sitting, he would have heard me say that, last year, investment was at a record

high of £55 billion, with the private sector outpacing the public sector. That is still true. I just wish that he had heard me say it about 20 times.

Mr. Kinnock: The Prime Minister never admits that manufacturing investment this year is still 20 per cert. in real terms below what it was in 1979. Does she share her Government's lack of concern for manufacturing investment? Does she believe that our future lies, as the Secretary of State for Trade and Industry said, in tourism? Will she now answer the question? Will she abandon those policies, or will she go ahead with cuts in construction, investment, plant, vehicles and industrial support during the next two years? If so, can she explain to the country how we can possibly afford it?

The Prime Minister: What matters is the return that one secures on investment. Because we have higher profits, we are now getting higher investment. The right hon. Gentleman always tries to ignore investment in the extractive industries, such as coal, which do not come under manufacturing industry. I also note how much he tries to disparage tourism. What matters is total investment, which is at an all-time high, and which we expect to remain high in the coming year. I am so sorry that he tries to run down tourism and other industries. We do not.

Mr. Evennett: asked the Prime Minister if she will list her official engagements for Tuesday 12 November.

The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.

Mr. Evennett: Will my right hon. Friend join me in congratulating the people of Thamesmead on their recent vote to establish a community trust to run the town after the abolition of the GLC, and their complete rejection of a takeover by Left-wing Greenwich council?

The Prime Minister: The vote by the people of Thamesmead was very significant. They have chosen a route that gives them far more control over their futures. That is absolutely correct, and I congratulate them on their choice.

Mr. Donald Stewart: Before the Prime Minister makes a statement on the Trustee Savings Bank, Scotland, will she bear in mind the fact that to proceed with legislation in the light of the judgment in the Court of Session would be to expropriate assets without compensation? In the light of the assurance that she gave to me on 23 July that the findings of the Scottish court would be obeyed, will she assure the House that she will not instruct an appeal to the English House of Lords?

The Prime Minister: Of course, the law must be upheld, but one has a right to all the remedies that the law proposes. I hope that the right hon. Gentleman is not asking for instant comment. He and the right hon. Member for Tweeddale, Ettrick and Lauderdale (Mr. Steel) would be the first to condemn that, and would think it right to consider the judgment before reaching decisions.

Mr. Nellist: asked the Prime Minister if she will list her official engagements for Tuesday 12 November.

The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.

Mr. Nellist: Will the Prime Minister drag herself away from all these banquets to consider for a few moments that


a quarter of her Government's £100 million support for Johnson Matthey Bankers could provide security for tens of thousands of working people in Liverpool, who do not aspire to £400,000 retirement homes in Dulwich, but only to decent family homes with gardens? Is it not obscene that the Government should prepare for a lock-out of council workers in Liverpool, while at the same time running a gravy train for their friends in the City?

The Prime Minister: The hon. Gentleman is trying to compare two completely different things. My right hon. Friend the Chancellor has made several statements and has answered many questions about Johnson Matthey Bankers. The matter is in the hands of the police, and it is for them to decide what to do. The people who are running Liverpool have brought it to its present disgraceful state.

Sir William Clark: Following my right hon. Friend's excellent speech at the Mansion House yesterday evening, does she agree that, from a total public expenditure of £ 139 billion this year, about £24 billion will be spent on capital projects? That is about 17 per cent. of our total expenditure, which is not a bad record. Does my right hon. Friend agree that that percentage can be increased only in three ways: by cutting other public expenditure, by increasing the public sector borrowing requirement or by increasing taxes?

The Prime Minister: I am grateful to my hon. Friend. I believe that, at last, people are beginning to realise the amount that is going in capital expenditure by the Government. Had they listened earlier, they might have got the message earlier. If we want more capital expenditure, it must come either by reducing current expenditure or by raising taxation, which would be most unwelcome to most people, especially those on below average earnings. Increased borrowing would increase interest rates, which also would be unwelcome to industry, which is trying to start up afresh.

Mr. McCusker: Will the Prime Minister take this opportunity to assure my constituents, who have survived numerous terrorist attacks launched on them from the territory of the Irish Republic, that she still considers them to be as British as her constituents and that she has no intention of diminishing that status by giving the Government of the Irish Republic any rule in the internal affairs of the United Kingdom?

The Prime Minister: Northern Ireland is a part of the United Kingdom and will remain a part of the United Kingdom unless the majority of people in Northern Ireland wish otherwise. Negotiations are still under way with the Republic. Any result will still be in accordance with the rule that decisions north of the border are taken by the United Kingdom Government, and those south of the border are taken by the Government of the Republic of Ireland.

Mr. Andrew F. Bennett: asked the Prime Minister if she will list her official engagements for Tuesday 12 November.

The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.

Mr. Bennett: Does the Prime Minister agree that, when she was Secretary of State for Education and Science, she believed that one of the best investments for

a nation was a first-class education system? Will she confirm that, while she has been Prime Minister, the proportion of gross domestic product spent on education has fallen from 4·3 per cent. to 3·5 per cent., which means that education has lost about £2 billion—more than enough to have saved any cuts in higher education, to have protected student grants and to have ensured that teachers could be paid a professional wage?

The Prime Minister: But, since that time, the number of pupils in schools has fallen by about 1 million. One would therefore expect the proportion of gross domestic product to fall. However, the amount spent on each pupil has never been higher than under the present Government and the proportion of teachers to pupils has never been higher than under this Government. One is entitled to say that now, instead of spending more money, we must try to get better value out of the money that we are spending.

Mr. Lawrence: Has my right hon. Friend seen the latest quarterly report of the Confederation of British Industry, which says that the employment prospects of small manufacturing businesses are the brightest for the past decade? Does that not show that the manufacturing sector has as great a role to play in sustaining our economic growth as the services sector?

The Prime Minister: I have seen the CBI's latest report. I believe that employment prospects are better, especially as, in the past two years, some 650,000 jobs have been created—the highest rate of job creation since 1973. I see that the OECD is forecasting that Britain will create more jobs than other OECD countries.

Mr. Ashley: asked the Prime Minister if she will list her official engagements for Tuesday 12 November.

The Prime Minister: I refer the right hon. Gentleman to the reply that I gave some moments ago.

Mr. Ashley: The Prime Minister spoke last night about the construction of new hospitals, but is she aware that there is a great scandal in most of our hospitals, new and old, because of dirty and unhygienic conditions, which are damaging many patients? Is she aware that those conditions are caused by negligent health authorities which are flouting the law by hiding behind Crown immunity? Will she consider abolishing Crown immunity to get rid of those conditions?

The Prime Minister: I think that on reflection the right hon. Gentleman will see that he has made an unwarranted slur on the vast majority of our hospitals, which are extremely well run and clean. There are some problems. He has asked me before whether Crown immunity should be lifted in regard to health and safety provisions. No decision has been made. My right hon. Friend is still considering the matter.

Mr. Sackville: asked the Prime Minister if she will list her official engagements for Tuesday 12 November.

The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.

Mr. Sackville: Is my right hon. Friend aware that, despite massive regional aid, there are many parts of the north of England where there is grave concern about the low levels of private investment relative to the south-east? Will she give an assurance that all relevant Government


Departments will continue to take actions designed to prevent the growth of the dangerous imbalance that is developing?

The Prime Minister: My hon. Friend will be aware that in July my hon. Friend the Member for Bolton, North-East (Mr. Thurnham) was being quite optimistic about Bolton and saying:

the success of Government policies in Bolton is evidenced by new factories and shops as well as a new road, a new railway and a new hospital to be built".—[Official Report, 11 July 1985; Vol. 82, c. 1260.]
We are trying to increase private investment, and the north-west has received about £80 million in regional development grant in 1984–85. That is meant to help investors to go to that area and to build new factories and new commercial offices.

Questions to Ministers

Mr. Speaker: Statement, Chancellor of the Exchequer.

Mr. David Steel: On a point of order, Mr. Speaker—

Mr. Speaker: Does the right hon. Gentleman's point of order arise directly from Prime Minister's Questions?

Mr. Steel: My point of order arises directly from one of the Prime Minister's replies. You will have heard the Prime Minister say, Mr. Speaker, that she wished to reflect on the judgment in the Court of Session this morning. May we take it that, because of that reflection, the Treasury press notice on the tapes announcing an appeal is incorrect?

Mr. Speaker: That is not a matter for me. We move on to the Chancellor of the Exchequer's statement.

The Chancellor of the Exchequer (Mr. Nigel Lawson): rose—

Mr. Martin Flannery: On a point of order, Mr. Speaker.

Mr. Speaker: I think that the hon. Gentleman's point of order does not arise from Prime Minister's Questions.

Mr. Flannery: It does.

Mr. Speaker: If it does, I shall take it.

Mr. Flannery: My point of order arises from Question Time a fortnight ago, Mr. Speaker—

Mr. Speaker: Order. That is a good try, but that is not what I meant.

Mr. Jim Craigen: On a point of order, Mr. Speaker. In one of her replies today, the Prime Minister said that a Minister would be making a statement on the Trustee Savings Bank—

Mr. Speaker: Order. This is an extension of Question Time.

Mr. Craigen: It is not.

Mr. Speaker: Order. We cannot have an extension of Question Time. The House does not want that and we have a busy day ahead of us. It is not a matter for me in any event.

Mr. Charles Kennedy: On a point of order, Mr. Speaker. In reply to my question the Prime Minister said clearly that the Government were reflecting on the judgment of the Court of Session. My right hon. Friend the Member for Tweeddale, Ettrick and Lauderdale (Mr. Steel) has made—

Mr. Speaker: Order.

Mr. Kennedy: rose—

Mr. Speaker: Order. The hon. Gentleman has said that the Prime Minister or the Government are reflecting. He did not say that I was reflecting. The hon. Gentleman must raise a point of order that I can answer.

Mr. Kennedy: rose—

Mr. Dennis Skinner: On a point of order, Mr. Speaker.

Mr. Speaker: If the hon. Gentleman's point of order arises directly from Questions today, I shall take it.

Mr. Skinner: The issue is quite simple for you, Mr. Speaker. If the Prime Minister has misled the House, is there not an obligation upon you, Mr. Speaker, to ensure that the right hon. Lady has an opportunity to put the facts straight?

Mr. Speaker: I cannot accept that the Prime Minister has misled the House.

Autumn Statement

The Chancellor of the Exchequer (Mr. Nigel Lawson): With permission, Mr. Speaker, I should like to make a statement.
I am laying before the House today an autumn statement which brings together the Government's outline public expenditure plans, proposals for national insurance contributions next year, and the forecast of economic prospects for 1986 required by the Industry Act 1975.
This year's autumn statement contains considerably more information than its predecessors. It breaks new ground by providing a forecast of the public expenditure outturn for 1985–86 for each Department, and the plans not just for the year immediately ahead but for each of the next three years. Both these innovations meet specific requests from the Select Committee on the Treasury Civil Service and I hope that they will be welcomed by hon. Members.
The outturn for this financial year is expected to be the same as set out in the Budget, that is, £134 billion. After allowing for inflation, this is lower than last year, which bore the brunt of the public expenditure cost of the coal strike.
The Government will continue to maintain firm control over public spending. Following this year's review, the planning totals for 1986–87 and 1987–88 will be held to the levels set out in the Budget —£139 billion and £144 billion, respectively. For 1988–89 the total has been set at £149 billion. Over these three years public spending in real terms is expected to be broadly flat at very slightly below this year's level. As a percentage of national output it will continue to decline as it has since 1982–83. By 1988–89 it should be back to its lowest percentage since 1972–73.
In order to meet contingencies, the plans contain large reserves, rising from £4½ billion in 1986–87 to £8 billion in 1988–89. The reduction in the reserve for 1986–87 as compared with the provisional reserve for that year, which I announced at the time of the Budget, chiefly reflects the fact that the passage of time allows part of the reserve in any given year to be allocated to individual expenditure programmes as their costs become known more accurately. But the £4½ billion reserve for the year immediately ahead remains a substantial figure.
Although I expect the planning total for 1985–86 to be the same as I did at the time of the Budget, the public sector borrowing requirement—subject to the usual margin of uncertainty at this time of year—is forecast to be about £ 1 billion higher—some £8 billion rather than £7 billion. This is due to lower sterling oil revenues. But even at £8 billion the PSBR would be the smallest that it has been as a percentage of GDP since 1971–72.
The PSBR would, of course, have been running at a higher level than this were it not for the proceeds from privatisation, to which I will turn in a moment. But even without the privatisation proceeds, this year's forecast PSBR would still be the smallest as a percentage of GDP since 1971–72.
The Government's privatisation programme is now getting into top gear and will continue for many years to come. [Interruption.] I am glad to see that the Opposition welcome that. I cannot stress so strongly the importance of this programme—now being emulated throughout the world—as a fundamental objective of Government policy. The transfer of state-owned businesses to the free

enterprise sector of the economy brings enormous long-term benefits to the nation as a whole in terms of greater concern for the customer and increased efficiency. It also provides the opportunity for a massive boost to wider share ownership, among both the public in general and the employees of those great enterprises in particular.
The increased pace of privatisation means that the proceeds from this programme will rise substantially from £2½ billion this year to £4¾ billion in each of the next three years. In particular, the planned flotation of the British Gas Corporation is included for the first time. At the same time, however, there have been increases in a number of public expenditure programmes, so that the overall planning totals have remained unchanged.
However, this needs to be seen in perspective. Even if the proceeds from privatisation were to be ignored altogether, the public expenditure planning total would still be broadly flat in real terms, at less than 1 per cent. above this year's total, and public spending would still be on a steadily declining path as a percentage of GDP, reaching by 1988–89 its lowest level since 1972–73.
The annual review of public spending provides an opportunity to reconsider priorities and adjust the balance between programmes. While some programmes this year have been held back, it has been possible to make significant additions to others.
There will be increased spending on the National Health Service over previous plans of £250 million in 1986–87 and £300 million in 1987–88. On top of this, health authorities are able to spend the savings from their cost improvement programmes, which are expected to amount to £150 million this year and still more in future years. This should enable health authorities to meet demographic pressures and to deliver improvements in services as well.
Total public sector provision for housing is being increased by £220 million net of receipts in 1986–87 and £200 million in 1987–88, and the housing plans now provide for some £3¼ billion of capital spending next year. Within this total, the Government believe that there should be a substantial shift in priorities in favour of renovation of the existing public sector housing stock.
An extra £54 million in 1986–87 and £71 million in 1987–88 is being made available for capital expenditure on national and local roads.
Just over £1 billion is being added to the social security programme for 1986–87, largely as a result of the 7 per cent. increase in benefits taking effect this month. Expenditure in the subsequent years of the survey period is subject to decisions on the Government's social security review, on which a White Paper will be published shortly.
Additional provision has been made under the law and order programme to allow local authorities to direct extra spending towards the police.
For defence, the provision is unchanged. After the substantial real increases in spending since 1978–79, from which the defence programme will continue to benefit, the emphasis must now switch to improving our defence capability through greater efficiency and value for money, especially in procurement.
On employment, there were large additions in the Budget to fund an expansion of the youth training scheme and the community programme. In this survey, a number of new initiatives have been agreed, but savings are to be made by a reduction in payments from the redundancy


fund. My right hon. and learned Friend the Paymaster General will be making a statement giving further details later today.
There have been significant improvements in efficiency and value for money in many programmes. It is a great mistake to fall into the trap of measuring public expenditure programmes solely in terms of the money put into them: it is improved output that matters.
Further details of these and other changes are contained in the autumn statement itself, and of course full details, together with information on running costs and manpower, will be given in the public expenditure White Paper to be published early in the new year.
I now turn to national insurance contributions. The Government have conducted the usual autumn review of contributions in the light of advice from the Government Actuary on the prospective income and expenditure of the national insurance fund.
The lower earnings limit will be increased next April to £38 a week, in line with the single person's pension, and the upper earnings limit will be similarly increased to £285 a week, broadly in line with earnings.
I announced in the Budget reduced rates of contribution for the lower paid and their employers—5 per cent. for those earning up to £55 a week, 7 per cent. for those earning up to £90 a week and 9 per cent. for employers of workers earning up to £130 a week. These took effect at the beginning of last month and are already starting to provide welcome assistance to the low paid and their employers, and a stimulus to the employment of the young and unskilled. The limits for these reduced rate bands will also be increased from April, in line with the lower and upper earnings limits, to £60, £95 and £140 a week, respectively.
There will be no change in the main class 1 contribution rates, which will remain at 9 per cent. for employees and 10·45 per cent. for employers. This is the third year running in which national insurance contribution rates have been held constant, despite a growing number of pensioners and the substantial uprating of benefits taking effect later this month.
My right hon. Friend the Secretary of State for Social Services will this afternoon announce details of these proposals, and will lay before Parliament the necessary order and the accompanying report by the Government Actuary.
Finally, I turn to the Industry Act forecast. The economy is progressing very much as I envisaged at the time of the Budget. Inflation is falling again, after the predicted temporary rise in the spring, although I now expect inflation in the fourth quarter of this year to be slightly above the Budget forecast: 5½ per cent. rather than 5 per cent.
The overall growth of the economy this year still looks like turning out at 3½ per cent.—the highest rate of growth since 1973.
The pattern of growth, too, has been much as envisaged. Exports and business investment, as expected, were the fastest growing elements in demand in 1985. The rise in total investment is now put at 4 per cent. in 1985; within this figure business investment is expected to be up by 7 to 8 per cent., to yet another all-time record.
As a result of this steady progress, there has been a substantial growth in the number of people in work since

1983. This has now been reflected in a levelling out in unemployment—albeit still at a sadly high level, not least because of the rapid growth in the total labour force. The prospect here is for some further improvement, assisted by the measures I announced in the Budget to help on the jobs front, which will have their main effect in 1986. But that improvement could easily be put at risk by excessive pay settlements.
The prospect for 1986 is one of continued growth and still lower inflation. The composition of growth is likely to change somewhat, with consumer spending taking up the running as exports—which had an exceptional rise of 7 per cent. this year—grow more slowly. The current account balance of payments surplus is forecast at £4 billion, compared with £3 billion in 1985. Fixed investment is expected to grow, once again, slightly faster than the economy as a whole.
Overall, the economy in 1986 is expected to grow by a further 3 per cent.—the fifth successive year of growth at an average of 3 per cent. a year, and into the sixth, the best performance since before the first oil shock. At the same time, inflation is expected to fall further, to 3¾ per cent. in the fourth quarter of 1986.
Indeed, if the forecast is correct—and I am the first to admit its inevitable fallibility—1986 promises to be the first year since the 'sixties when inflation and growth will be within one point of each other. What is beyond doubt is that we are now achieving the steady growth with low inflation which successive Governments have sought in vain for a generation.
All in all, Mr. Speaker, the progress and prospects I have described amount to the clearest possible vindication of the policies we have been following these past six years, and will continue to follow.
The autumn statement is now available from the Vote Office, and the House will no doubt wish to take it into account when we debate the economy tomorrow. The framework of public expenditure control which it sets out should allow scope for considered and justified reductions in the burden of taxation; and these in turn will further reinforce the economy's flexibility and dynamism. It is on that prospect that the future prosperity of all our people depends.

Mr. Roy Hattersley: The Chancellor, with characteristic modesty, claims an achievement which a generation of his predecessors sought but failed to obtain. The speaking note for Government Back Benchers, which has been circulated on today's subject—the economy—describes its state as a dream come true. Does the Chancellor regard the economy as a "dream come true" for the 3·5 million men and women who are unemployed, for the families whose child benefit is to be cut in real terms, for the 95 per cent. of taxpayers who are paying more now than in 1979 and for the owner-occupiers who are burdened by uniquely high interest rates?
Will the Chancellor tell us some of the details of his proposal? Why have we not this year been told the size of what is called the "fiscal adjustment"? Is it because last year the right hon. Gentleman so mismanaged and bungled his tax cut promises that he precipitated the January sterling crisis? Is it simply because, like so many other promises—especially tax cut promises—what started out as an estimate of fiscal adjustment ended with a promise that he failed to deliver? Or, more likely, has he failed to


tell us the fiscal adjustment because he wishes to pretend that the sale of British Gas is not intended to finance the temporary tax cuts with which he hopes to solve some of the Conservatives' electoral problems?
If the Chancellor denies the connection between the sale of British Gas and the prospect of tax cuts, will he tell us whether the proposed temporary tax cuts could be financed without selling off those national assets? What other possible explanation can the right hon. Gentleman give the House for creating a private monopoly, already equipped with the power to fleece its consumers? When the Chancellor has explained the purpose of that privatisation, will he tell us about the long-term implications? What does he think should happen when the privatisation proceeds run out? Does he think that the tax cuts that they finance should be restored, or does he think that there should be more cuts in public expenditure? After British Gas is sold and that annual income to the Government is lost, how does the right hon. Gentleman recommend that it should be made up—not for one year or two years, but in perpetuity?
All that the right hon. Gentleman can buy with the proceeds of the sale of British Gas is time. I ask the Chancellor again: what happens when the privatisation proceeds run out? What happens when the oil revenues run out? What happens when the report by the House of Lords predicting a collapse in manufacturing industry is proved to be true? In short, is the Chancellor capable of thinking beyond, looking beyond and planning beyond October 1987?
Tucked away in the seventh paragraph of the Chancellor's statement was the aside that the public sector borrowing requirement had increased £1 billion above its target; yet, despite the PSBR being £1 billion out of line, the right hon. Gentleman still boasts about the economy's strength. As the Government have now been partly converted to the virtues of investing in public sector capital —a proposition that they derided and scorned last year when it was advocated by the Opposition—why does not the Chancellor at least allow the same overshoot next year which he has found tolerable this year to finance some more job creation through public sector capital expenditure? Is it because all his plans, all his intentions and everything revealed by this statement are concerned not with long-term investment but with short-term expediency?
Let me give the House an obvious example from the document. The Chancellor boasts about growth next year. Every penny of that growth will be accounted for by personal consumption. According to the right hon. Gentleman's own figures, export growth will collapse to 2 per cent. and imports will grow by twice that amount. Of his asset sales, one tenth will go on capital expenditure and nine tenths will be used to finance the election bribes.

The Chancellor of the Duchy of Lancaster (Mr. Norman Tebbit): What is the right hon. Gentleman worried about?

Mr. Hattersley: I am worried about the economy. I am not worried about the Conservative party.
Finally, since we have heard so much about growth, will the Chancellor have the grace to admit that the real figure for growth during the entire life of this Government is an annual average of 1·3 per cent.? The real growth that we have had demonstrated today is a growth of panic about the Government's future.

Mr. Lawson: It is clear that the right hon. Gentleman is in an acute state of panic about his electoral chances.
On the subject of growth, there was a world recession during the Government's early years. We went to the polls in 1983, having gone through that recession, and, of course, there was a low rate of growth. I do not know whether the right hon. Gentleman is trying to have a replay of the last general election, but I must remind him that the electorate returned the Government to office with an increased majority.
On the right hon. Gentleman's point about growth next year—I am glad that he accepts my forecast of 3 per cent. for next year—it is completely untrue to say that this is made up entirely of consumer expenditure, although I have nothing against that. There is a 3½ per cent. growth of fixed investment predicted—faster than the growth of the economy as a whole.
The right hon. Gentleman devoted a large part of his remarks to privatisation. If he had listened to my statement, he would have heard that public expenditure was declining steadily as a proportion of GDP, even if no account is taken of the proceeds of privatisation. Therefore, the scope for tax reductions is assured. To the extent that there is any relationship between the privatisation proceeds and tax rates, it enables the tax reductions which would take place in any case to be brought forward a little to the great benefit of the economy. As I have told the House on a number of occasions, the public sector borrowing requirement is always set after taking full account of the proceeds of privatisation. The privatisation programme will not merely carry on throughout this Parliament, as set out in the autumn statement; it will carry on throughout the next Parliament as well. The right hon. Gentleman asked what would happen when that programme came to an end. I am glad to learn of his confidence that we shall be in office for a further six years.

Mr. Terence Higgins: If allowance is made for the dubious accounting convention that treats the proceeds of asset sales as reductions in borrowing and public expenditure and excludes debt interest from the planning totals, does my right hon. Friend agree that domestic demand has been reflating and is planned to go on reflating?

Mr. Lawson: No; I am afraid that my right hon. Friend is wrong on both counts. He calls the accounting convention dubious, but that is the international accounting convention. It is not a convention peculiar to this country. It was followed by the Labour Government when they were in office. The figures are clearly set out so that my right hon. Friend can make the adjustment that he seeks to make. He will see that general Government expenditure, including debt interest, declines as a proportion of GDP.

Mr. Robert Sheldon: Is the Chancellor aware that the disposal of £5 billion of public assets represents sales of an exceptional magnitude and that it is essential that he does not hurriedly unload them to meet his public expenditure targets? Will he place a higher priority on this matter than he has done in the past by ensuring that, if necessary, such sales are postponed to avoid denying to the taxpayer and the British public the full worth of those assets.

Mr. Lawson: The flotations of state-owned companies have been conducted with great and acknowledged success throughout the world. As a result, there is benefit to the companies themselves, to the people employed in them and to the nation. I hope that if the right hon. Gentleman catches your eye again, Mr. Speaker, at the end of these questions he will perhaps inform the House which of the companies that we have privatised or plan to privatise, he will not, if he comes to office, renationalise.

Sir William Clark: Does my right hon. Friend agree that, despite the prophets of gloom and doom, his statement will be widely welcomed not only in the House but in the country? An encouraging aspect of his autumn statement is the continual decrease of public expenditure in relation to GDP. Obviously, that will bring forward the time when tax burdens can be reduced. Does he further agree that our competitors overseas with a low proportion of GDP vis-a-vis public expenditure and low taxation are able to create jobs?

Mr. Lawson: My hon. Friend is quite right. The two most successful economies in the world today are those of the United States and Japan. They have the lowest proportion of public expenditure in relation to GDP, and the lowest level of taxation in relation to GDP. Those are important facts to bear in mind, particularly in the context of how to create more jobs. In addition to our satisfactory record on public expenditure and the prospects there, the House will welcome the prospect of a further reduction in inflation to below 4 per cent.

Mr. David Penhaligon: Can the Chancellor tell us whether one of the programmes to be held back is overseas aid? If so, is that the Government's response to the massive lobby of this House by people of all political persuasions about the Government's reaction to Third world problems?
Can the Chancellor confirm that if, for some reason or other, the privatisation programme is delayed—and today he mentioned some of the difficulties involved—tax cuts will be put off with it?
Is the Chancellor's statement an admission by the Government that monetarism does not solve the undoubted problems of pay settlements? If he accepts that that is so in his statement, can he tell us what the Government will do about pay settlements in the next two years? Please do not say, "Appeal to the CBI."

Mr. Lawson: One question is quite enough, and I will answer the first question that the hon. Gentleman raised which I expect is closer to his heart—the matter of aid. I assure the hon. Gentleman that there is no reduction in the aid budget. The aid budget has been increased and will be maintained in real terms throughout the survey period.

Sir Peter Hordern: As my right hon. Friend is now giving more weight to interest rates and less to monetary targets, may I ask whether he now considers this to be a suitable time to apply for entry to the European monetary system?

Mr. Lawson: My hon. Friend knows that we keep this matter under continual review.

Dr. Jeremy Bray: Does the Chancellor expect manufacturing output in 1986 to recover to its 1979 level? When the right hon. Gentleman says the assumption in the forecast is that the exchange

index will remain at about 81, is the implication that if the dollar falls, the pound will be allowed to fall, too, part way against the deutschmark?

Mr. Lawson: It is not helpful to go into details about assumptions of exchange rates. As the hon. Gentleman rightly said, the assumption is that the exchange rate, the weighted average, will remain broadly at this level. In answer to his first question, I hope he welcomes the fact that we now look like going into the sixth successive year of steady growth at around 3 per cent. a year.

Mr. John Townend: While welcoming the increase in the proceeds of asset sales, I should like to ask my right hon. Friend whether he is aware that some of his hon. Friends are disappointed that the Government have not been able to reduce public expenditure and regret that, before the deduction of asset sales, Government spending will increase by over £7 billion in the next year?

Mr. Lawson: My hon. Friend should remember that, unlike previous Governments, we are steadily reducing public expenditure as a share of gross domestic product.

Mr. Stuart Randall: What predictions has the Chancellor made about the impact of this autumn statement on the level of unemployment?

Mr. Lawson: The autumn statement in itself is but a small part of the Government's overall policies. Those policies have brought about a greater growth in the number of jobs than in all the other countries of the Common Market put together. Over the last six months we have seen a flattening out in the level of unemployment.

Mr. David Howell: Does my right hon. Friend accept that he is to be warmly congratulated on preparing the way for a series of Budgets which will reduce the level of personal and other taxation and increase public capital spending where it is needed? That will be done against a background of falling inflation and rising output. As he said, that has been an aim of Governments for many years and hitherto it has not been achieved. When he looks at the scope of tax cuts, will he consider whether there is room for returning to a lower rate of tax of, say, 25 per cent.—the kind which existed previously —so as to reduce the disincentives to those who are first going to work?

Mr. Lawson: I will certainly be happy to look into the suggestion that my right hon. Friend has made.

Mr. Jack Ashley: Is the Chancellor aware that he is not only selling off the country's silver to balance the books, but selling off some of our great national institutions? The Institute of Psychiatry is having to sell itself to private American firms in order to keep going. The Chancellor should be deeply ashamed of pimping for this financial prostitution.

Mr. Lawson: The right hon. Gentleman is a little bit confused. These enterprises are sold not to American firms, but to the British people.

Mr. Anthony Nelson: If my right hon. Friend seeks more effectively to rebut arguments such as that which has just been presented—that we are burning the seedcorn by financing current expenditure not only with the proceeds from privatisation but with the proceeds of North sea oil—is there not a compelling case for the


Government doing what every prudent individual and company has to do, which is to account separately for the capital income and outgoings and for current income?

Mr. Lawson: I take entirely my hon. Friend's point. It is one which I have considered on a number of occasions. I have some responsibility in this matter. The different figures for current and capital expenditure are shown much more clearly in the national accounts for anybody to see. These distinctions are not always very, not very—[AN HON. MEMBER: "Helpful."]—helpful. Thank you very much. To take one example, some expenditure on education—not all, but some—which is classified as current expenditure is in fact an investment.

Mr. Dick Douglas: Will the Chancellor reflect on the consumer-led boom that he has predicted and give the House some indication about the effect of the boom on imports, and in particular on our propensity to import manufactured goods?

Mr. Lawson: I am sorry that the hon. Gentleman is so gloomy at the prospect of the consumer doing a little bit better. I can give him the answer. We expect the current account surplus of the balance of payments to rise from £3 billion this year to £4 billion next year.

Sir Kenneth Lewis: Does my right hon. Friend recall that when Noah sent the animals from the Ark two by two, he said to them, "Go forth and multiply"? Unfortunately, two of them coming out were snakes and they said, "We can't; we're adders." Some of us are a bit concerned because the adding up of the Budget in recent years has meant restriction. I am glad to know that in his statement he is adding to the amount of money spent on housing and the infrastructure. Will he continue that process for the next few months?

Mr. Lawson: I always listen carefully to the advice of my Leicestershire neighbour. I read in the papers recently that, after a long and distinguished career in this House, he is not proposing to stand at the next election. I wish him a happy retirement.

Mr. Ian Wrigglesworth: Will the Chancellor of the Exchequer come clean and tell the House that the Government have done an about-turn? Is it not true that the Government are reflating the economy by selling off public assets? Does not the flood of press releases from Government Departments this afternoon, boasting about their public expenditure increases, demonstrate that fact?
If the Chancellor has a fiscal adjustment to make later in the year, will he also ensure that that resource goes into creating jobs and helping those who have been hit by the mistaken policies of the past five or six years—those who are unemployed and need jobs and help with the poverty that they are facing?

Mr. Lawson: As I said, the employment prospect, although not as good as I should like, is clearly improving.
The only about-turn of which I am aware is by those former members of the Labour party who are now members of the SDP.

Mr. Richard Alexander: Would it create any problem for my right hon. Friend's financial strategy if, in the ensuing year, he permitted water authorities to borrow in the market rather than to implement their capital investment programmes through increased charges? Is he aware that this year the Anglian water authority has said

that it can carry out its capital investment, if it is able to borrow in the market, with increases of only 7 per cent., but that if it has to be done by charges the figures will be 11 per cent? Farmers and business men very much resent having to pay increases that are higher than inflation and higher than the water authorities themselves would wish.

Mr. Lawson: It is not the case that the water authorities could borrow more cheaply in the market than they do from the Government.
My hon. Friend raises the very interesting question of the privatisation of the water authorities. My right hon. Friend the Secretary of State for the Environment is thinking very deeply about that.

Mr. Michael Foot: Has the Chancellor of the Exchequer any idea how deeply offensive it is for him and other members of the Government to talk of six years of steady growth in those areas which have suffered six years of 20 per cent. unemployment, particularly when they are hit by cuts in Government regional and other aid? When will the boasted prosperity reach those areas?

Mr. Lawson: I have never sought to deny the problem of unemployment in particular parts of the country. By the same token, I hope that the Opposition will not seek to deny the success in economic growth and lower inflation that the Government have achieved.

Mr. Patrick McNair-Wilson: Given my right hon. Friend's welcome commitment to infrastructural refurbishment, while at the same time keeping a firm hand on public borrowing, will he now relax the rules governing the amount of their own money that local authorities can spend? Has he heard the old adage that a stitch in time saves nine?

Mr. Lawson: The reasons for the restriction on the pace at which local authorities can use the receipts from council house sales were set out clearly in the debates in the last Session. I do not see that the position has changed at all from that time.

Mr. Jeff Rooker: Given that the Prime Minister told the House at the Dispatch Box a year ago that increased infrastructure was not a cost-effective way of increasing jobs, and that in January she said that it would cost £37,000 for an unemployed worker to go into public sector house building, is the Chancellor's statement today intended to increase or decrease unemployment?

Mr. Lawson: As I said in reply to the hon. Member for Kingston upon Hull, West (Mr. Randall), the Government's policy, among other things, is designed to do what it can to help to create new jobs. New jobs are being created faster than in the whole of the rest of the European Community put together.

Mr. John Browne: Does my right hon. Friend accept that, in the circumstances, the record he has put before the House is by any standards a measure of outstanding performance? It is the envy of all democratic Governments and beyond the wildest dreams of the Labour party, We should be very grateful to him for it.
My right hon. Friend did not mention interest rates, which are hitting British business and its prospects for growth? Will he please say something on this subject?

Mr. Lawson: I am grateful to my hon. Friend for his accurate assessment of the Government's record.
As I have said on several occasions, interest rates will be kept no higher than is necessary to ensure that there are monetary conditions sufficient to reduce inflation. I will not take any chances with inflation.

Mr. Mark Fisher: What is the Chancellor's estimate for the deficit on the balance of trade in manufactures?

Mr. Lawson: I do not think that the deficit on the balance of trade in manufactures will be very different this year from last year.

Mr. David Crouch: I also thank my right hon. Friend for his statement, in particular for the extra injection of money into the National Health Service. It comes at a critical time in the Health Service which has resulted in some contraction of services. I hope that my right hon. Friend will discuss with the Secretary of State for Social Services the need for some reappraisal at district level so that the valuable extra money may be used speedily.

Mr. Lawson: I am grateful to my hon. Friend for his remarks. The whole House knows of his concern for and the work that he has done in the Health Service—in particular, the hospitals—over many years. However, I am still concerned about the waste that takes place within the National Health Service. There is scope for achieving enormously greater value and output from the existing expenditure, in addition to what may be gained from any increase in expenditure. I hope that those responsible in the Health Service will address themselves very quickly to achieving those savings.

Mr. Tam Dalyell: I am quite relaxed about receiving an uncivil answer from a Chancellor who can be as rude to Conservative Members as he is to the Opposition. Does he understand that many people, not only in the Labour party, and not only my hon. Friend the Member for Hackney, South and Shoreditch (Mr. Sedgemore), are deeply concerned to hear what some of us did on Friday about the affair of Johnson Matthey? Why is he so coy—

Mr. Speaker: Order. I find it very difficult to know how the hon. Member will relate his question to the autumn statement.

Mr. Dalyell: It relates to the general handling of the economy. The question is simple: why is the Chancellor so coy about having an inquiry? In December 1984, was he told the extent of the alleged fraud—

Mr. Speaker: Order. I do not think that the hon. Gentleman's question has much connection with the statement.

Mr. Nigel Forman: In welcoming the Government's—

Mr. Dalyell: rose—

Mr. Speaker: Order. Mr. Nigel Forman.

Mr. Forman: I welcome the Government's continuing programme of asset sales. Will my right hon. Friend take the trouble to stress not only the arguments for asset sales as an offset to increased public spending on worthy projects but those for wider share ownership and, most

importantly, the fact that the companies concerned, when returned to the private sector, will be contributing to the revenue by way of personal and corporate taxation?

Mr. Lawson: My hon. Friend is right in thinking that the purpose of privatisation is to benefit the nation through the greater efficiency of the companies concerned. Every one of them has done better in the private sector than it did when it was owned by the state. The purpose is also to accompany it with a greater expansion of share ownership—doubling the number of individual shareholders throughout the country. That is the purpose of privatisation, and that is why it is here.

Mr. Allen McKay: Can the Chancellor be more positive about unemployment? Can he give even an assessment of how many people he expects to get work, thereby reducing unemployment, as a result of his asset-stripping and his statement?

Mr. Lawson: As the hon. Gentleman knows, it is not the custom to give forecasts of unemployment. I expect the growth in the number of people in employment, which is greater than in the whole of the rest of the European Community, to continue.

Several Hon. Members: rose—

Mr. Speaker: Order. There is another statement to follow. I shall call those hon. Members who are on my list for this statement on the next statement if they wish to take part then.

Mr. Hattersley: The Chancellor told me that the sale of British Gas did no more than bring forward tax reductions. Will he, therefore, confirm that there could be no tax reduction this year or next year without the sale of British Gas?

Mr. Lawson: I said nothing of the sort. Therefore, I can confirm nothing of the sort.

Mr. Speaker: Statement—Mr. Kenneth Clarke.

Mr. Martin Flannery: On a point of order, Mr. Speaker.

Mr. Speaker: I shall take the points of order after the statements, as is usual.

Mr. Flannery: I have a point of order—

Mr. Speaker: Order. I said to the hon. Gentleman that I would take his point of order after the statement. I know what it is about, because he has kindly given me notice of it.
Later—

Mr. Dalyell: On a point of order. Some of my hon. Friends—some but not all—thought that you, Mr. Speaker, were a bit quick on the draw in ruling out of order my question to the Chancellor of the Exchequer. I asked him to reflect on the issues concerned because they were about public and private assets. At your convenience, Mr. Speaker, perhaps you will write to me about your reasons for that ruling.

Mr. Speaker: I shall not give my reasons. I do not think that the House would appreciate that. I hope that I was not quick on the draw. If the hon. Gentleman had mentioned "privatisation", or something of that sort, that might have been easier for me.

Mr. Dennis Skinner: In relation to the statement by the Chancellor of the Exchequer and the ensuing questions, especially the one that was asked by my hon. Friend the Member for Linlithgow (Mr. Dalyell), some of us find it strange and difficult to understand that when the Chancellor of the Exchequer had the opportunity to clear his name by having a public inquiry into the Johnson Matthey affair—

Mr. Speaker: Order. I must stop the hon. Gentleman. I cannot help him, because it is not a matter for me.

Enterprise and Employment

The Paymaster General (Mr. Kenneth Clarke): With permission, I should like to make a statement on new enterprise and employment measures. Overall provision for the Department of Employment has increased by some £600 million in each of the years 1986–87 and 1987–88 compared with last year's autumn statement. That growth in expenditure has enabled us to increase the number of jobs available under the community programme by 100,000, to introduce the new two-year youth training programme as from April next year, which will ultimately help some 450,000 young people each year and lead to real qualifications for a working life. It will also enable us to fund a range of new measures which I am announcing today.
The cost of those new measures is, of course, included in my Department's public expenditure plans for 1986–89 which were announced a few momemts ago by my right hon. Friend the Chancellor of the Exhequer. These and other increases in our Department's spending are offset in part by a reduction in spending from the redundancy fund.
We propose to bring to an end, for all firms other than those with fewer than 10 employees, the system of sharing part of the cost of statutory redundancy payments through rebates from the redundancy fund. Our intention is that the rebate should not be payable for redundancies which take effect after 31 October 1986. We shall introduce the necessary legislation later this Session.
It is important to stress that that change does not affect employees' entitlements in any way. Employees will be entitled, as before, to redundancy payments from their employer to go to an industrial tribunal if the employer refuses to make the required payment, and, where an employer cannot pay, to receive a payment direct from the Department of Employment.
The rebate has been steadily reduced by successive Governments. It is now 35 per cent. For most employers that is no longer a significant contribution to their total redundancy costs. We believe that that public spending should no longer be used in subsidising redundancy and ought now to be put to better use.
I turn now to our further measures to stimulate enterprise and the growth of small businesses and also to help long-term unemployed people find work.
We have suffered for many years from one of the lowest rates of self-employment and new business creation in the whole of western Europe. That has now changed. We now have more self-employed people than for some 60 years. However, we can do still more to encourage the growth of self-employment and small business by ensuring that both advice and finance are available to the small business man at the right time. We are therefore announcing three measures designed to further those aims.
As far as self-employment is concerned, the enterprise allowance scheme has already helped nearly 110,000 unemployed people since August 1983 to set themselves up in business. We have therefore decided to expand the scheme to a maximum of 80,000 new entrants a year in 1986–87 at an additional cost of £17·5 million —an increase of 20 per cent.
We have already assisted over £500 million of lending to small businesses through the loan guarantee scheme. In order to provide better access to finance and business


advice we have now decided to extend the scheme, which was due to end in December 1985, until the end of this financial year while we consider its longer-term future.
We are also increasing significantly the support given in England to local enterprise agencies, which play an important and growing role in providing business advice and practical assistance to small firms at the local level. We are making available an additional £2·5 million for that purpose in 1986–87.
Besides its new responsibility for small firms, the Department of Employment now also has responsibility for tourism. The industry estimates that it is creating over 50,000 jobs a year. Last year some 14 million people visited this country, spending over £4 billion. To ensure that that growth continues, we are increasing the funds available next year to the British Tourist Authority and the English tourist board to £40 million—an increase of about 20 per cent. in the boards' funding. We shall ensure that a substantial part of that money will benefit areas of the country which could attract more tourists and where unemployment is high.
I turn now to our measures to help the long-term unemployed. They are designed to tackle two key problems. The first is that many people who have been unemployed for a long time become demoralised about their ability to find work. The second is that the relationship of benefits to pay can reduce the attractiveness of jobs at the lower end of the wages scale. We propose therefore to introduce pilot schemes to test the effectiveness of two entirely new measures designed to combat those problems. Those pilots will operate for six months from January 1986 in seven different areas.
First, we are asking the Manpower Services Commission to ask long-term unemployed people in the pilot areas to a counselling interview at their jobcentre. The object will be to see whether they can be placed in suitable jobs —including jobs in the expanding community programme—or in existing training courses. In addition, the MSC will be able to offer places on entirely new short training courses specifically designed for those who have been out of work for more than a year. The courses will help to assess their potential and aptitudes, to brush up their basic working skills and to improve the techniques of applying for a job. We shall ask the MSC to cover as many as possible of the long-term unemployed in the pilot areas with those new arrangements so that we can assess their effectiveness.
The second new measure is a job start scheme. This is a radical new approach under which any person in the pilot area who finds a job after being unemployed for at least 12 months will be paid a weekly allowance of £20 for the first six months of employment in addition to his or her wage. The scheme aims to make lower paid jobs more attractive to people on high rates of benefit. The allowance will be available to those who take jobs with a gross income of less than £80 a week. Full details will be announced shortly.
In the improving climate for jobs, we are determined to increase our contact with those long-term unemployed people who may have been losing hope. We have already started the expansion of job clubs, which have so far achieved remarkable success in placing the majority of people who use them. We are writing to all long-term unemployed people inviting them to contact their

jobcentres for advice and support and the two pilot measures announced today reinforce our determination to help long-term unemployed people back into jobs.
The range of measures that I have announced today also demonstrates our determination to intensify our efforts to promote enterprise and business growth. We are creating the conditions in which jobs will come and unemployment will be reduced. I believe that today's new measures should have the support of all parts of the House.

Mr. John Prescott: Any measures that contribute to a reduction in unemployment will be welcomed by all sides of the House, but there is very little in the statement that will make a real contribution to increasing jobs. The Paymaster General has not made clear how many jobs he estimates will come from the series of measures he has announced. That is what the unemployed want to know—how many jobs will be brought about by this intervention of the Government to reduce unemployment.
Does the Paymaster General accept that his proposals have more to do with massaging the unemployment figures for the coming general election than with increasing real unemployment?
Does he further accept that the community programme to which he referred pays people £65 a week? If any of those programmes are expanded, does he envisage that more will be paid to people in those jobs?
Most of the youth training schemes are not new. Announcements were made about them previously. There is a possibility of 100,000 more YTS places being provided as a result of the announcement that the Paymaster General has just made. Can he tell us whether the quality of the training that young people can expect to receive under the scheme will be more than under the skivvy schemes offered at present? [HON. MEMBERS: "Oh."] The Paymaster General has only to interview YTS people to make a judgment about that. Will compulsion be used to get youngsters into YTS by the implementation of a mechanism to report those who refuse to accept places on such schemes.
The right hon. and learned Gentleman made proposals on redundancy. As the employer will now have to pay the full cost of redundancy, what is the right hon. and learned Gentleman's estimate of the increased number of redundancies, brought about by the Government's policies? While carrying their fair share of redundancy costs, will employers now face an extra charge of £250 million, to finance the scheme that the Paymaster General announced? Does that mean that there might be changes in the national insurance contribution to redundancy payments?
With regard to his proposals on local enterprise schemes, can the Paymaster General tell us whether he is prepared to be as generous in his approach to local authorities that have local employment and enterprise schemes? They have done a better job than many of the private enterprise schemes, producing more jobs, which are often cheaper, of better quality and longer-term. Does the right hon. and learned Gentleman accept that I do not want to knock private schemes? Anything that creates jobs I quite welcome—[HON. MEMBERS: "Quite?"] Will the right hon. and learned Gentleman join me in supporting instead of attacking local authorities that use their resources to create jobs through their enterprise schemes? I hope that he will give us an assurance about that.
Does the Paymaster General accept that his proposals to help the long-term unemployed will be welcomed in the House, but that hon. Members will recall that about 1·3 million people are long-term unemployed, which is more than the total unemployment that the Government inherited from the Labour Government? The House will welcome the right hon. and learned Gentleman's statement that he has recognised that the long-term unemployed are demoralised and not to be attacked. As often happens now, people say that such people do not want to work and are workshy. We constantly hear it from someone in another place.
The new initiative to which the Paymaster General referred is more about reducing wage levels than about meeting the need for real jobs. Does the right hon. and learned Gentleman accept that £20 added to average unemployment pay of about £50 gives a wage level of £70 for the six-month scheme? If that is so, will the scheme be compulsory? If people refuse to go on it, will they lose their benefit? At the end of the six-month period, if a person refuses to continue to work for a wage from which the £20 has been deducted, will he face the prospect of suspension of benefit?
The Paymaster General—[HON. MEMBERS: "Oh, no."] I am sorry. The Paymaster General's statement has many measures in it, and I am entitled to ask at least one question about each one.
The right hon. and learned Gentleman announced an extra £40 million of Government money to increase tourism. There may be more jobs for ice cream salesmen and so on, but does he accept that the reason why more people are visiting this country is to do with the high pound? The reason why people are visiting areas such as the west midlands is that the high pound destroyed the manufacturing base in that area. We find no comfort in thinking that now we must earn our living in the tourist industry.
If the Government's policy is to improve the business climate and create jobs, would not the community be better served with the measures that we have proposed time and again —for example, releasing the £6,000 million held by the local authorities in their housing accounts, resulting in real jobs to meet real need? The Government should be proposing such measures instead of designing policies simply to massage the unemployment figures downwards for the general election.

Mr. Clarke: The hon. Gentleman asked me for estimates of how many extra jobs the package will create. It is important to stress that the background is a rapid growth in new jobs in the economy already. As my right hon. Friend the Chancellor of the Exchequer said, it is estimated that 677,000 new jobs have been created up to March 1983. The package will help to encourage such increases, but we have pilot schemes to discover how much extra job creation will result from some of the proposals.
The idea that the package is designed to massage the figures goes back to a former argument. It is not possible for the hon. Gentleman to sweep aside the extensions to the enterprise allowance scheme and to the loan guarantee scheme, the new money for tourism and the new assistance for people moving from long-term unemployment to their first job, as massaging the figures. The measures are substantial and we believe that all of them will encourage further the process of job creation.
The hon. Gentleman asked how much would be paid to those who go on the community programme. We keep under review the present £63 average figure. The hon. Gentleman will know, even before he leaps into free collective bargaining in this area as in others, that if we increase that average figure too rapidly, we merely reduce the total number of people whom we can assist under the scheme. We are expanding that number rapidly at the moment to 230,000 places.
I am disappointed by the hon. Gentleman's slighting remarks about the youth training scheme. The scheme now has the support of the vast majority of Labour local authorities and a growing number of trade unions up and down the country. I share his concern that we should achieve quality training and provide training that is likely to be at least a first step towards a recognised skill and vocational qualification. If the hon. Gentleman wants me to talk about consumer reaction, I can tell him that all our surveys show that a little over 80 per cent. of young people who go on YTS say that they derive value from it and are grateful for what they obtain.
The hon. Gentleman referred to compulsion in connection with YTS and other schemes. It is not our intention to go in for any compulsion in either training or jobs. We are not changing the rules on entitlement to benefit. The position remains that, as long as people can satisfy the officers that they are genuinely available for work, they are entitled to benefit. The package is concerned with making the opportunities for that work more readily available to more people.
The hon. Gentleman also referred to the effect of the change in the redundancy rebate arrangements. I am sorry, but I do not altogether understand his question. I cannot see how taking away the rebate that goes to employers who make redundancies is likely to increase the total number of redundancies. If anything, it is likely to have the reverse effect. The hon. Gentleman talked about a charge to employers. At the moment it is financed out of the redundancy fund. Therefore, the present arrangements, which we regard as obsolete, are a sharing of the pool of cost of redundancies so that the more successful businesses tend to subsidise the less successful businesses.
Any question of changes in national insurance charges will have to come much later, because the immediate impact in the coming year is negligible. My right hon. Friend the Chancellor has made clear our decision on national insurance charges for next year.
We are greatly increasing support for local enterprise agencies. They provide advice and support, and sometimes manage workshops. They intervene directly and helpfully in the business creation process. I shall reserve for a later occasion the debate about the good work of local authority enterprise boards which, compared with the hon. Gentleman's description, I find at the least variable. I am not at all sure that the policy of some of the local authority enterprise boards, of investing ratepayers' money directly in somewhat dodgy financial businesses, is altogether a good rival for our local employment agencies.
As regards the long-term unemployed, we all agree on the need to tackle the problems of over a million of these people. The fact that we now have an improving climate for jobs makes it easier for us to do so. What we are doing is re-establishing contact with them all, because some of them may well have assumed that no jobs can be found for them, and, when we have established contact, offering


them a range of services, job experience, training and the kind of support offered by job clubs and so on that will make it much easier for many of them to find jobs. A higher level of vacancies is being notified to jobcentres than at any time since 1980. The job clubs in some difficult areas, such as the one in Middlesbrough which I visited last Friday, have had a great deal of success in placing long-term unemployed men and women in jobs.
The trouble with the long-term unemployed, as the job market improves, is that their own lack of recent work experience makes them less attractive to employers. Hence the job experience schemes, community programmes and the £20 payment that we are introducing. The latter means that the plunge from high levels of long-term benefit to income is cushioned, particularly if the job taken in the first place is a low paid one. After six months, we hope that the new employee will have so established his attractiveness to his employer that any loss in income would be made up, or that the six months' job experience will make him a much more attractive potential employee to others. Because we do not know how many new jobs it will create, we are introducing this as a pilot scheme in six or seven areas. We believe it to be a radical, new, imaginative idea to speed up the process of getting the long-term unemployed back to work.

Mr. Michael Latham: Is my right hon. and learned Friend aware of the warm welcome on the Government's side of the House for the tone and content of his statement this afternoon? Will he tell us more about the pilot areas? Are they to be geographical areas only or concentrated on particular industries—for example, textiles?

Mr. Clarke: First of all, geographical areas: one in Scotland, one in Wales and five in England. Their exact locations are to be announced shortly by my right hon. Friends the Secretaries of State in the case of the two other nations and by my hon. Friend the Under-Secretary in the case of England.

Mr. Michael Foot: If these measures are to be effective at all, both for the long-term unemployed and others, is it not the case that new training places will have to be found or existing training facilities will have to be increased? Is more money to be devoted to that? Will those training centres or skillcentres, prevented from receiving Government increases, now be able to apply for the funds for which they asked six months, 12 months, or two or three years ago, when they were attacked or closed down by the present Government?

Mr. Clarke: The total amount that we are spending on the introduction of the new youth training scheme is rising rapidly and will reach over £1 billion by the time the two-year scheme has built up to its full level. As regards skillcentres, there has recently been rationalisation of them, but the total amount of training available to adults in this country remains slightly higher than before.

Mr. Michael Grylls: Is my right hon. and learned Friend aware that there will be a very wide welcome throughout the country, and certainly among objective observers, for his increase in and expansion of the enterprise allowance scheme, which has been outstandingly successful in helping new

entrepreneurs in the difficult first year of starting a new business? May I also welcome his announcement of a permanent place for the loan guarantee scheme in the armoury of help to growing businesses? It has been very cost-effective. Will my right hon. and learned Friend also tell the House that he will undertake a review of the detail of the scheme, particularly the fact that the money provided under it is very expensive? If he could reduce the premium, it would be a great help to the growing businesses that we all want to see expand.

Mr. Clarke: I am grateful for my hon. Friend's support in pressing for the extension of the enterprise allowance scheme. It has been remarkably successful in helping people through the first year of business. For every 100 business men helped in this way, we find at the end of a year about 65 extra jobs created as they take more people into the new business.
I am also grateful for my hon. Friend's support of the loan guarantee scheme, which will be extended to give us time to review precisely those details of the present operation of the scheme to which he drew attention. I agree that the disincentive effect of the premium and other, connected matters are something to which we shall have to give our urgent attention and reach decisions.

Mr. Richard Wainwright: Some of the palliatives that the Paymaster General has announced on behalf of his noble Friend will undoubtedly provide valuable but mostly temporary help to a relatively modest number of the unemployed. Will he say why his noble Friend has treated the 1·3 million long-term unemployed to these tiny crumbs? Will he explain why there are just seven pilot schemes when the needs and problems of this growing army of long-term unemployed are sufficiently known? Why this limiting of the scheme to a gross wage of £80 a week? Will he specifically say whether that must be a full week or whether this is a scheme to encourage the Government's favourite ploy of part-time jobs? Why six months? What magic transformation is likely to occur in six months?
On the problem of skilled men who have been unemployed so long that they worry about the decay of their skills, why are they exempt from a scheme that is so very limited in the maximum gross pay that is permitted?

Mr. Clarke: First, this is a joint statement by my right hon. and noble Friend and myself. I trust that in another place he will not find people so desperately trying to minimise the impact of the package that we have announced.
I am glad, however, that the hon. Gentleman welcomes the two new measures to the extent that he wishes them to be introduced all over the place now, rather than waiting for us to try them out in seven pilot areas. This Government like to try out the effectiveness of new schemes before we introduce them everywhere. I realise that the Liberal party finds it easy to discover new ideas and sell them instantly, overnight, like a magic cure-all.

Mr. Tony Baldry: While I welcome these measures as an indication that the Government are prepared to leave no stone unturned, will not my right hon. and learned Friend accept that the greatest contribution to be made to job creation is by private employers ensuring that there is wage restraint throughout the economy, and


that if wages simply kept pace with inflation instead of constantly outstripping it we would see the creation of something like half a million new jobs every year?

Mr. Clarke: There has to be a relationship between wages on the one hand and inflation, productivity and performance on the other. I agree with my hon. Friend that if wages are allowed to outstrip the productivity improvement and performance of individual businesses, a great deal of this job creation programme will be put at risk. That is the message that we constantly reiterate. It is one to which the alliance parties offer the solution of some kind of inflation tax and a pay norm for everyone, and on which the Labour party remains uncannily silent when it comes to any discussion of employment.

Mr. Ron Leighton: Will the Paymaster General seriously consider putting more resources into the community programme to improve it and, in particular, to enable him to increase the allowance of £63? This would enable him to include family men who at the moment cannot be accommodated by the scheme.

Mr. Clarke: The average payment allowed under the scheme is £63. As I have explained, while we are reviewing it, the difficulty is that if we dramatically increase it we may reduce the number of places under the scheme. [HON. MEMBERS: "Why?"] Within a set total. We shall review that allowance but it is important not to allow the scheme to be diverted into spending more money on fewer recipients.
I am grateful to the hon. Member for his support for the programme and his emphasis on improving the quality of it. We are taking steps to ensure that the work done under the community programme is of distinct benefit to the previously unemployed people working on it and also of benefit to the community. We are aiming to raise the quality of the work done under that programme.

Mr. Jim Lester: I thank my right hon. and learned Friend for his statement, particularly coming after a further statement on selective investment for which many of us have pressed for some time. I congratulate him on the imagination shown in the range of measures brought forward and on trying new things such as the £20 premium. Can he assure us that, when we reach out to the long-term unemployed, an essential thing for which many of us on the Government Benches have been pressing, and which we support, the services of the Manpower Services Commission will be available in correct measure and talent to guarantee that they will be given the best possible counsel?

Mr. Clarke: I am grateful to my hon. Friend for his comments and I share his welcome for the measures in the autumn statement, which confirm our continuing commitment to a proper level of capital expenditure in our financial planning. I also confirm that the Manpower Services Commission will be greatly involved in providing the quality of advice and service that is required by long-term unemployed people. We shall be taking steps to make sure that the necessary provision is made by way of resources, staff and preparation so that that proper advice and support is forthcoming.

Mr. Harry Ewing: Is the right hon. and learned Gentleman aware that the reference in his statement to the long-term unemployed and the implications of his statement represent a calculated insult

to the long-term unemployed? [Interruption.] Is he not aware that when it comes to being skilled in filling in job application forms, the long-term unemployed are experts; they fill in hundreds of application forms and receive the same answer all the time. That is why they are the long-term unemployed.
I invite the Minister to visit my constituency, where we have suffered the closure of Kineal colliery, the decisions by the BP refinery to pay off 300 people, by BP Chemicals at Grangemouth to shed 300 jobs, by ICI to shed jobs, by the Grangemouth Whisky company to pay off people, plus a threat to Grangemouth docks as a result of the closure of Gartcosh. Will the right hon. and learned Gentleman come to my constituency and tell the long-term unemployed where they should send the forms once they have filled them in?

Mr. Clarke: I do not underestimate the problems faced by people who live in areas that have undergone profound change in the nature of employment locally, as the hon. Gentleman described, and that is one reason why we are putting more effort into bringing back fresh jobs, even in areas such as tourism, hotels, leisure and so on, which are derided by his Front bench spokesmen—[Interruption.] Opposition Members deride it because it is not unionised. That is why they resist the growth of employment in tourism, leisure and related industries.
In relation to helping the long-term unemployed in difficult areas, I invite the hon. Gentleman as soon as possible to take the opportunity to visit one of the organisations that bear the unusual American-created title of job club, as I did on Friday, and meet some of the long-term unemployed as they settle down, with support and help, to make repeated applications for jobs with the advice that the MSC can give them. Where we have tried them so far, in difficult areas, about three-quarters of those who have gone through the organisation have found themselves in jobs. It is encouraging to find how high is the morale and to note the support that they give each other as well as the support that they derive from the jobcentres.
That all helps to enable them to get their way back into a job market that is steadily improving. I cannot understand why any steps of this kind should be dismissed by Opposition Members. Do they wish us to give advice and support to the long-term unemployed, or just leave them alone and pay benefit?

Mr. Piers Merchant: Is my right hon. and learned Friend aware that his welcome initiatives today will be applauded in areas such as the north-east of England, which have suffered particularly severe economic and unemployment problems and which historically have had a low percentage of self-employed compared with the average in Britain? Will he take a special look at the well-publicised claims of the north-east in regard to tourist potential and the growth that could be achieved in that industry with sufficient help centrally?

Mr. Clarke: I hope that through the measures that I have announced and those that we have already taken, through the city action team in Newcastle and Gateshead and the Cleveland initiative that we are taking on Teesside, we shall be giving assistance to the north-east. I agree also with my hon. Friend in the emphasis that he placed on tourism because that is an area with considerable tourist attractions but also high unemployment.
At present, too many overseas—indeed, British—visitors tend to pass through, perhaps with a short stop at Durham, and then head north to Edinburgh from London. We must do something to detain them longer in the north-east and provide the services that will create jobs and wealth for the local economy.

Mr. Robert Litherland: Is the Minister aware that two former Tory Prime Ministers, the churches, a Select Committee of the House of Lords, chambers of commerce throughout the country, the trade unions and nearly 4 million unemployed people are telling the Government that their policies are not working, that the manufacturing base is in decline and that the economy is in tatters? Is he aware that it is pure arrogance on the part of the Prime Minister and her puppets to say that Conservative policies are working? His statement today is just another pathetic attempt to delude the unemployed.

Mr. Clarke: The hon. Gentleman extracts a simple message from a large number of people allegedly giving it. I find that a cacophany of opinions comes forth from the various bodies to which he referred. It will not do, every time the Government explain that we have had five years of sustained growth in the economy, rising output in manufacturing, record levels of fixed investment and new jobs being created, for Opposition Members to say that that is just a palliative. I suggest that the expression of the hon. Gentleman is simply an expession of his political disappointment as he sees that things appear to be getting somewhat better.

Miss Janet Fookes: May I offer a warm welcome to my right hon. and learned Friend on his initiative in supporting tourism. Will he ignore the snide remarks of Opposition Members on this important matter? Will he from this calculate how many jobs are provided through the building industry and manufacturing of various kinds in support of tourism?

Mr. Clarke: I shall try to obtain the figures that my hon. Friend describes. I am sure that she is right to say that, as soon as one goes to Plymouth in the south-west, one finds that the remarks of Opposition Members on the subject of tourism are treated with total derision, because it is already an important source of employment of all kinds throughout that locality and could be the source of many more jobs.

Mr. Ian Wrigglesworth: Welcome though many of these measures are, is the Minister aware that some of them will be regarded as dealing with the symptoms rather than with the cause of the disease? As the youth training scheme deals with one of the causes of the disease, will he agree that if its status and value are to be improved, it will have to become a recognised qualification that can be used to enable youngsters to go on and obtain further qualifications? Will he discuss the matter with the Secretary of State for Education and Science and seek to bring that about at the earliest possible opportunity?

Mr. Clarke: I can certainly say yes to the substance of that question. It must be our aim to introduce good quality youth training schemes, because youth training must become a permanent part of the preparation of many of our young people for work if we are to have a modern

and developed economy. I look forward to contributions that press us towards attaining that quality. It is a pity that some people are still prepared to dismiss the whole idea and not see the way in which a modern economy should go.

Mr. Roger Freeman: Is my right hon. and learned Friend aware that his statement about the extension of the community programme will be warmly welcomed by my constituents? That welcome will extend in particular to one aspect of the package—the facility for voluntary organisations to take on additional staff under the community programme. Will he undertake to give the matter broader publicity?

Mr. Clarke: I shall certainly take up that invitation because there is great scope in that area—so long as we make sure that the voluntary bodies that provide places under the community programme provide places in work that will be of continuing use to the unemployed. Many of the voluntary bodies that we have in mind provide a great deal of personal service. That service requires considerable organisation, and those bodies seem to have great scope for providing places under the community programme.

Mr. A. E. P. Duffy: Is the right hon. and learned Gentleman aware that the problems of the long-term unemployed in a traditional industrial district such as south Yorkshire have been exacerbated by the emergence of a poverty equilibrium of low income, poor educational attainment, poor retraining facilities, poor public amenities and now the emigration of skilled and semi-skilled workers? Will he tell the House how even one of his measures will correct one of those conditions?

Mr. Clarke: The enormous expansion of youth training, in particular, and the training initiative, has been aimed at that very problem in the last six years. I agree that in an area such as south Yorkshire, we must ensure that the level of skills is available so that the area remains attractive to new investment and employment.

Mr. Henry Bellingham: I welcome my right hon. and learned Friend's statement and in particular that part of it dealing with local enterprise agencies and enterprise allowance schemes. Will he agree that we have the best ever climate for small businesses and the most comprehensible package to help those businesses? However, will he urge the Secretary of State for Defence to introduce a scheme of voluntary service in the armed forces to complement the community programme?

Mr. Clarke: I agree with my hon. Friend's remarks about the climate for small businesses. The creation of new small businesses has been reasonably sucessful and has provided more employment opportunities. However, there is further to go. In many economies equivalent to ours, more people are employed in small businesses in proportion to the total work force than occurs in Britian. I shall refer my hon. Friend's final point to my right hon. Friend the Secretary of State for Defence to ascertain whether there is enthusiasm in the armed forces for a voluntary service.

Mr. Paddy Ashdown: Some of the measures announced today will be welcomed by some, although too few, of the long-term unemployed. Is the Paymaster General aware that undermanning in many jobcentres


means that the support and advice that he wishes to offer to the long-term unemployed is simply undeliverable? Jobcentres such as the one in my constituency are so undermanned that the staff are scrabbling to keep pace with the paperwork and pointing applicants towards the notice board. It is wholly out of the question for them to offer advice. Unless the Minister gives the MSC more resources, some of the measures announced today will be meaningless.

Mr. Clarke: We constantly try to make sure that the resources and staffing available to the MSC match its responsibilities. Resources available to the MSC have increased remarkably in recent years, but we have a duty to ensure that the resources are used in the best way and with the best value for money. Therefore, the staff required must be continually assessed. I hope that we get the balance right in Yeovil and elsewhere, but we must not reach the point where our main effort in creating new jobs is creating posts for the employees of the Manpower Services Commission. We shall endeavour to recruit the numbers required.

Mr. Richard Holt: My right hon. and learned Friend will know how much his visit to the Lingdale YTS centre and the job club in Middlesbrough was appreciated. His announcement about the £20 for the long-term unemployed will also be appreciated. One thing that we seek is improved facilities for those have have just become unemployed and who wish to move. Would my right hon. and learned Friend consider easing the rules and regulations to assist those who could take jobs in other parts of the country before they become long-term unemployed?

Mr. Clarke: I was impressed by the Lingdale training centre which is in a depressed area. That gives the lie to some of the comments of Opposition Members, who have said that there are no prospects in such places. Young people are acquiring skills in those centres that will greatly improve their job prospects in the neighbourhood. I welcome my hon. Friend's interest in people who wish to move about the country to obtain work. We shall review the effectiveness of our geographical mobility scheme. Mobility of labour is important; the problem lies in housing policy as much as in employment policy.

Mr. Tam Dalyell: The right hon. and learned Gentleman told my hon. Friend the Member for Falkirk, East (Mr. Ewing) to think about tourism in Grangemouth. The right hon. and learned Gentleman referred to money for the English tourist board, but there was no mention of money for the Scottish tourist board. Is this because the Secretary of State for Scotland has been making cuts, or is there no money available?

Mr. Clarke: I announced money for the British Tourist Authority and the English tourist board. That is the full extent of my responsibility. I shall pass the matter to the Secretary of State for Scotland, who I believe will make a similar statement.

Mr. Andy Stewart: My constituents will welcome the statement on tourism and especially the increased budget for the tourist boards. In addition to our famous Nottinghamshire miners, my constituency has the heritage of Sherwood forest and Robin Hood. Only recently there was an announcement about the

development of a £25 million holiday village, which will create 300 new jobs. It is an insult for the Opposition to rubbish tourism as a job creator.

Mr. Clarke: As someone who is almost a denizen of that forest, I entirely agree with my hon. Friend's remarks. I hope that the hon. Member for Kingston upon Hull, East (Mr. Prescott) need never visit the area when the jobs are in place to repeat his remarks about ice cream salesmen. The jobs are real and valuable. The hon. Gentleman would obstruct investment.

Mr. Robin Corbett: May I remind the Minister that young blacks and Asians in inner cities such as Birmingham, are trebly disadvantaged when they try to find work, especially against the background of the inner city riots in the summer? What is in the statement to offer them hope of jobs?

Mr. Clarke: First, I rather agree with the hon. Member's analysis. As he knows, we are reviewing our policy on inner cities. A huge amount of money is expended by central Government in the inner city areas, where every possible support is needed to enable disadvantaged young people to get jobs. We must ensure that that money is spent to the best advantage to produce the maximum benefit for the residents and to get to the root of the problems the hon. Member described.

Mr. Richard Hickmet: May I mention one problem with the community programme? To be eligible for the community programme one must draw unemployment benefit or supplementary benefit. A redundant steel worker or mineworker who has invested his redundancy payment wisely and prudently cannot benefit from the community programme. I ask my right hon. and learned Friend to consider this issue. It is unacceptable to have long-term unemployment in a constituency such as mine, or in a mining constituency, just because large redundancy payments preclude people entering the community programme.

Mr. Clarke: I shall consider that question. However, I believe that recipients of unemployment benefit as well as those of supplementary benefit are eligible for the community programme. —[HON. MEMBERS: "No."] We foresee litigation about the benefit rules relating to the community programme. I shall consider the problem raised by my hon. Friend when I review the outcome of that litigation.

Mr. Allen McKay: Will the redundancy payments mentioned by the Paymaster General affect people in small firms that have gone bankrupt? Will the Minister assure the House that redundancy payments will still be made in such cases? The top-up payment of £20 will reduce the payment of supplementary benefit and housing benefit. May we have a report to the House on how the pilot schemes have worked?

Mr. Clarke: The hon. Gentleman raises an important point. The entitlement of the individual worker will not be affected. The workers in a company that has gone bankrupt, or that can no longer meet its statutory obligations on redundancy, will still be entitled to look to the redundancy fund and the Department of Employment for the payment of their legal entitlement. Details of the


payment to be made to the long-term unemployed who go into work—those mentioned by the hon. Gentleman are all relevant—will be announced in the near future.

Mr. John Butterfill: Does my right hon. and learned Friend accept that the British tourist industry will warmly welcome the initiative that he has announced? Will he confirm that the increase in funding to the British Tourist Authority and the English tourist board is the full amount suggested by the ETB chairman? Will he also confirm that the chairman estimated that, were he to receive that and additional funding, he could create 10,000 new jobs? Can the Minister give us some idea of exactly where—he mentioned the beach resorts, which I welcome—the additional money will be deployed? Finally, will he confirm that tourism creates not only ice cream salesman jobs, but real, long-term jobs in construction, the steel industry and the linen industry?

Mr. Clarke: The sum that I mentioned was the amount for which the chairman asked. The chairman, who has considerable expertise in such matters, and no doubt with the support of his board, estimated the new jobs that would result. We are discussing with the boards the precise deployment of the moneys that we have made available. I have already mentioned the emphasis that we shall place on regions with high unemployment. My hon. Friend concluded with some perfectly valid points. I hope that today's exchanges, and the support that we have given the tourist boards, will stop people making flippant and hostile remarks about tourism.

Mr. Charles Kennedy: Will the Paymaster General acknowledge that those of us who represent constituencies with fragile rural economies will give an unqualified welcome to the added priority given to tourism—provided, as the hon. Member for Linlithgow (Mr. Dalyell) made clear, that extra cash is available for Scotland? Will the Paymaster General accept that the Labour spokesman, the hon. Member for Kingston upon Hull, East (Mr. Prescott) speaks only for himself and the Labour party, and not for the alliance, when it comes to the importance of tourism?

Mr. Clarke: I shall ensure that the Scottish position is made clear as rapidly as possible by those with more responsibility than I have for these matters. I endorse what the hon. Member for Ross, Cromarty and Skye (Mr. Kennedy) said. One need only look at the seats represented by the Liberal party and the Social Democratic party to realise that no hon. Member from either of those parties is likely to join in Labour's attack.

Several Hon. Members: rose—

Mr. Speaker: Order. I will allow questions to continue for another five minutes. We have a very heavy day ahead of us. If questions are short, everyone may participate.

Mr. John Watts: In connection with the pilot areas for the operation of the new counselling service for the long-term unemployed, will my right hon. and learned Friend ensure that at least some areas of severe skill shortage are included in that scheme as they contain significant numbers of long-term unemployed people and the scope for helping people into jobs through counselling may be greater there than in some other parts of the country?

Mr. Clarke: I appreciate that extremely valid remark, which is particularly relevant to my hon. Friend's constituency, where the problem is finding sufficiently skilled people to maintain the expansion of firms.

Mr. Robert Banks: My right hon. and learned Friend is to be congratulated on his valuable statement. Will he ensure that the extra funds available to the BTA have a compensatory balance factor to allow for adverse fluctuations in sterling? Will he also ensure that attractions are stimulated in Yorkshire and the north of England to draw more tourists away from London and the south? Will my right hon. and learned Friend further ensure that the grants given under section 4 are dealt with speedily so that we can get new jobs into place as soon as possible?

Mr. Clarke: If my hon. Friend had asked my right hon. Friend the Chancellor of the Exchequer a few moments ago whether any of the public spending provision could be made subject to movement in the exchange rates, he would not have got a sympathetic answer. It is impossible in public finance to budget on that basis. I am, however, sympathetic to my hon. Friend's point about the present uneven distribution of job opportunities in tourism and leisure. The Government intend to bear that in mind when discussing how the money should be distributed.

Mr. Peter Thurnham: I am sure that these measures will be welcomed in parts of the north-west with high long-term unemployment. Is my right hon. and learned Friend aware of the good reception being given locally to a pilot scheme in Bolton to provide guaranteed jobs for those who have been out of work for three years or longer?

Mr. Clarke: I am aware of that and I am grateful to my hon. Friend for keeping me in close touch with the progress of that pilot scheme, which will have a much wider interest if its success continues.

Mr. David Maclean: Is my right hon. and learned Friend aware that in the Lake District, we realise that thousands of genuine jobs depend on tourism? Will he ensure that the extra resources available do not go to Hull but come to places such as the Lake District where we are not snide and sneering about such jobs?

Mr. Clarke: I have known Labour local authorities who disbursed their public funds according to the majorities of their members in different parts of the local authority area. The Government do not do that. They are as concerned with the unemployed people in Hull as they are with those in the Lake District. Nevertheless, we propose to make good use of the funds available.

Mr. William Cash: Will my right hon. and learned Friend accept my congratulations on the extremely interesting package he has announced today? When will he introduce legislation which is directly relevant to small businesses and to local enterprise agencies?

Mr. Clarke: We do not need primary legislation for any part of the package that I have announced today, except for the changes on redundancy rebate. The other parts will be brought into effect as soon as possible.

Mr. Rob Hayward: I too welcome my right hon. and learned Friend's announcement. Will he address himself to two problems? First, in areas such as


Bristol, places on existing youth training schemes have not been filled. A similar point was raised by my hon. Friend the Member for Slough (Mr. Watts). Secondly, will my right hon. and learned Friend consider contacting companies that are announcing substantial expansion, to which the Opposition have not referred, such as Peugeot in Coventry, Farm Machinery in Doncaster and Nissan in the north-east, and ensure that they consider expanding the number of training places? The Government should assist with those places.

Mr. Clarke: There is a surplus of youth training scheme places in most localities. It is important to retain some surplus because it gives more choice to would-be trainees, enables us to match their individual needs and gives some flexibility. Although we must ensure that we are not financing more places than necessary, the surplus gives us an opportunity to raise the quality of the training.
I note what my hon. Friend said about new firms and agree that the Government must ensure that the many firms that are expanding should be enabled to increase their contribution towards the training effort.

Mr. John Townend: Is my right hon. and learned Friend aware that extra help for tourism and small businesses, will be very welcome in my constituency? Will the expansion of the community programme allow him to consider removing the anomaly of those who are long-term unemployed and not drawing social security benefit—often because they have a working wife—not being allowed to apply for a place on the community programme?

Mr. Clarke: I am grateful to my hon. Friend. It is important to recognise that in a modern, developed economy such as ours, positive steps must be taken to accelerate the growth of new jobs in small business, through self-employment and in new industries such as tourism and leisure. The Opposition too often look back to the traditional pattern of industry where their political base used to lie. That is why they are so resistant to developments in those areas.
The Government continue to review the benefit rule in relation to access to the community programme. It is important that there are rules to enable the Government to target the opportunities of the community programme on those who have been unemployed principally because they have lost a previous job.

Mr. John Evans: May I warmly congratulate the Paymaster General—[HON. MEMBERS: "Hear, hear."]—on his discovery that people who have been unemployed become demoralised by their inability to find work? Will the Paymaster General ensure that that revelation is passed on to the chairman and vice-chairman of the Conservative party?
Will the Paymaster General explain to the House what he meant when he said in his statement that the job start scheme will be concentrated on people on high rates of benefit? Does this mean that those who have been unemployed for a long time will not qualify for this new scheme? Will the people who qualify for this new scheme receive family income supplement? Are not the Government simply switching resources from one area to another?

Mr. Clarke: We tested the scheme's effectiveness within pilot areas and all those who have been unemployed for more than 12 months will be eligible for this new payment. The hon. Member for St. Helens, North (Mr. Evans) mentioned the impact that will have on taxation, family income supplement and other matters affecting the beneficiary. All these matters will be dealt with in a more detailed statement as soon as possible. The Government's aim is that all those people will receive an additional £20 in their pockets to enable them to move from benefit to employment.
My "discovery" is not a new one. While looking at the Opposition during the statement by the Chancellor and during my own statement, I discovered that there is a growing sense of demoralisation among some underemployed ex-Ministers on the Opposition Benches. Perhaps they will be able to take advantage of the services offered by the Government.

Paymaster General (Reference to Member)

Mr. Martin Flannery: On a point of order, Mr. Speaker. My point of order concerns the Paymaster General, who has just been answering questions. I hope his answers to questions were not as remote from reality as his remarks about me in the House at Question Time a fortnight ago. The Minister was endeavouring to answer a question from my hon. Friend the Member for Bolsover (Mr. Skinner). I think the Minister was rather stung about it, as he got carried away. The Minister is usually a smooth operator with a fatal facility for words, but he pushed himself into a position he could not get out of. He said—

Mr. Speaker: Order. The point of order should be addressed to me and it is difficult for me to answer for the Minister.

Mr. Flannery: Mr. Speaker, what the Minister said has caused me a great deal of inconvenience. It was quoted in the press and if the Minister had said it outside the House, I would have sued him. It was quoted in the press. I will read what he said:
I notice that the hon. Member for Sheffield, Hillsborough (Mr. Flannery) has just taken his place.
When he said that—I do not know whether his eyes are bad—I was in a school in Dusseldorf in West Germany studying primary education.
The right hon. and learned Gentleman lingered within the same idiom, to which he seems to be addicted, in the same way that I am addicted to Question Time in the House. He said:
If he had been here sooner, instead of engaging in some part-time occupation, his earlier question could have been answered." —[Official Report, 29 October 1985; Vol. 84, c. 804.]

That has caused me a good deal of inconvenience. It was in my local press, a very Right-wing Tory press that does not like me and which I assume likes the right hon. and learned Gentleman, although it seems to have a certain affection for my hon. Friend the Member for Bolsover (Mr. Skinner). I should like an apology from the right hon. and learned Gentleman and a confession that he was as remote from reality then as he was when he answered questions this afternoon.

The Paymaster General (Mr. Kenneth Clarke): Further to the point of order. I hoped that I had sorted out that unfortunate matter in a letter which I wrote to the hon. Gentleman last week, which I said he could use quite freely and publicly. I regret that he was caused embarrassment locally by the serious reporting by his local newspaper of a frivolous incident in the House, which was not accurately reported in Hansard. I do not blame the Hansard reporter because it was difficult to hear what was being said at the time, but the remark to which the hon. Gentleman takes particular objection was aimed at the hon. Member for Bolsover (Mr. Skinner). He had just slipped into his place and I was engaged in an exchange with him. I can tell the difference between the hon. Members for Sheffield, Hillsborough (Mr. Flannery) and for Bolsover. I can confirm, if it helps with his local newspaper, that both are most assiduous in their attendance and that both make themselves only too readily apparent when they are here at Question Time. The hon. Member for Hillsborough had not been in his place for a question earlier on but I accept that that was because he was unavoidably absent on parliamentary business with his Select Committee.

Mr. Speaker: Honour is satisfied. I think that the hon. Member for Sheffield, Hillsborough (Mr. Flannery) has received a generous apology.

TSB (Scotland) Sale (Judgment)

Mr. Jim Craigen: I beg to ask leave to move the Adjournment of the House, under Standing Order 10, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
The Davidson Judgment in the Court of Session in the TSB (Scotland) sale
The Prime Minister, as the First Lord of the Treasury, must have known today that the Treasury is to appeal against the Trustee Savings Bank ruling by a Scottish judge that the assets of the bank belong to its depositors. I recognise that there is a difficulty, but this is a matter of considerable importance in Scotland and in the kingdom as a whole. Throughout the consideration of the Trustee Savings Banks Bill, which I followed closely, Treasury Ministers insisted on the Government's neutrality. In the absence of an adequate statement by Ministers today and the apparent contradiction in the announcement by a Treasury spokesman that the Government intend to appeal, I ask you, Mr. Speaker, earnestly to consider a debate.

Mr. Speaker: The hon. Member for Glasgow, Maryhill (Mr. Craigen) asks leave to move the Adjournment of the House for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
the Davidson judgment in the Court of Session on the TSB (Scotland) sale.
I have listened with care to what the hon. Member for Maryhill has said, but I regret that I do not consider that the matter that he has raised is appropriate for discussion under Standing Order No. 10. I cannot, therefore, submit his application to the House.

BILL PRESENTED

DOCKYARD SERVICES

Mr. Secretary Heseltine, supported by the Prime Minister, Mr. Secretary Britian, Mr. Secretary Younger, Mr. Secretary Baker, Mr. John Moore and Mr. Norman Lamont presented a Bill to make provision in connection with any arrangements that may be made by the Secretary of State for or with a view to the provision by contractors of certain dockyard services: And the same was read the First time; and ordered to be read a Second time tomorrow and to be printed. [Bill 9.]

Statutory Instruments, &c

Mr. Speaker: With the leave of the House, I propose to put together the 11 motions relating to statutory instruments.
Motion made, and Question put forthwith pursuant to Standing Order No. 79(5) (Standing Committees on Statutory Instruments, &amp;c.).
That the draft Undertaking between the Secretary of State for Scotland and Regionfields Ltd. trading as Easdale Island Shipping Line be referred to a Standing Committee on Statutory Instruments, &amp;c.
That the draft Pushchairs (Safety) Regulations 1985 be referred to a Standing Committee on Statutory Instruments, &amp;c.
That the Legal Aid (Scotland) (Financial Conditions) Regulations 1985 be referred to a Standing Committee on Statutory Instruments, &amp;c.
That the Legal Advice and Assistance (Scotland) (Financial Conditions) Regulations 1985 be referred to a Standing Committee on Statutory Instruments, &amp;c.
That the draft Merchant Shipping (Prevention of Oil Pollution) (Amendment) Order 1985 be referred to a Standing Committee on Statutory Instruments, &amp;c.
That the Legal Advice and Assistance (Financial Conditions) Regulations 1985 (S.I., 1985, No. 1614) be referred to a Standing Committee on Statutory Instruments, &amp;c.
That the Legal Aid (Financial Conditions) Regulations 1985 (S.I., 1985, No. 1615) be referred to a Standing Committee on Statutory Instruments, &amp;c.
That the draft Employment Subsidies Act 1978 (Renewal) (Great Britain) Order 1985 be referred to a Standing Committee on Statutory Instruments, &amp;c.
That the draft Dental Auxiliaries (Amendment) Regulations 1985 be referred to a Standing Committee on Statutory Instruments, &amp;c.
That the Customs Duties (ECSC) (No.2) Order 1985 i S.I., 1985, No. 1630) be referred to a Standing Committee on Statutory Instruments, &amp;c.
That the draft Redundancy Payments (Local Government) (Modification) (Amendment) Order 1985 be referred to a Standing Committee on Statutory Instruments, &amp;c. —[Mr. Archie Hamilton.]

Question agreed to.

Orders of the Day — Debate on the Address

[FIFTH DAY]

Order read for resuming adjourned debate on Question [6 November],

That an humble Address be presented to Her Majesty, as follows:

Most Gracious Sovereign,
We, Your Majesty's most dutiful and loyal subjects, the Commons of the United Kingdom of Great Britain and Northern Ireland in Parliament assembled, beg leave to offer our humble thanks to Your Majesty for the Gracious Speech which Your Majesty has addressed to both Houses of Parliament—[Sir Reginald Eyre]:—

Question again proposed.

Orders of the Day — Industry and Employment

Mr. Speaker: May I again make an appeal for brief contributions in the Queen's Speech debate? No fewer than 33 right hon. and hon. Members have shown their interest. I have no authority to limit speeches to 10 minutes between 6 o'clock and 8 o'clock or between 7 o'clock and 9 o'clock but I hope, as was the case yesterday, that voluntary restraint will be shown so that as many right hon. and hon. Members as possible may be called to make contributions to this important debate.

Mr. John Smith: I beg to move, at the end of the Question, to add:
But humbly regrets that the Gracious Speech proposes no change in policies which have caused record levels of unemployment, a growing and alarming deficit in Britain's balance of trade in manufactured goods, and a continuing erosion of Britain's industrial base, includes privatisation measures which will cause the forced sale at cheap prices of valuable national assets and increased unemployment, and seeks to remove the statutory protection afforded by Wages Councils in order to impose further cuts in the wages of the lowest paid.
In the amendment we seek to draw attention to the facts about Britain's industry and economy, about the real nature of the Government's proposals in the Gracious Speech and about their real meaning and implication. I emphasise the need for reality because it seems that in many ways the Government have become totally disconnected from reality. The Chancellor's autumn statement has confirmed that provisional view.
A growing body of opinion in this country—including chambers of commerce, the Select Committee of another place and distinguished economists and correspondents—emphasises what the Opposition have been saying for many years: that there is a serious crisis facing this country, particularly its manufacturing industry. It agrees that there has been what can only be called a terrible retrenchment of manufacturing industry in this country since 1979. It confirms that there is a growing and appalling deficit in the balance of trade in manufactured goods and that as more time goes by we realise with frightening clarity the missed opportunity of North sea oil and the problems that are being opened up now that North sea oil is in the peak year of its production.
There is a curiosity in the Government's approach to manufacturing industry. No doubt we will hear this further

when the Secretary of State replies. All Government statistics about the economy and particularly about industry start in 1981. We are always told that there has been an increase in output or investment or whatever the criteria are. The statistics all start at what the Government call the trough of the recession in 1981. Who do they think were the Government between 1979 and 1981 when massive damage was done to Britain's industry and about 20 per cent. of our manufacturing capacity was wiped out? They cannot try, by some statistical sleight of hand, to pretend that they were not the Government for the first two years of their period of office.
As one knows, it is very easy to show that figures are improving if one compares them with the lowest ever figures in our history. If one is taken to the bottom of the valley, it is relatively easy to make it look as though one is making steady progress up the hill. That is the substance of the Government's statistical manipulation. Manufacturing output is still 10 per cent. below the level at which it stood in 1979 when they took office. We have lost not only jobs but markets and industries and whole areas of economic endeavour.
It was therefore remarkable to hear the Prime Minister refer last night at the Mansion house to the renewal of this country's assets. What does she see as she travels around the country? Does she see a country that is being renewed? Through some curious prejudice, the Prime Minister never travels by rail. I understand that she has never been on a British Rail train since she became Prime Minister. When one travels around the country by rail one sees with startling clarity the devastated areas. If the Prime Minister and her colleagues made a few journeys by rail, they would see clearly, as those who have been away from this country for some time tell us, how awful the devastation is. Those hon. Members who represent industrial areas do not need to be told by visitors to this country what has happened to British industry.
Since 1979, output in Japan has increased by 20 per cent. It has increased by 10 per cent. in the United States, by 6 per cent. in France and by 4·3 per cent. in West Germany. In the United Kingdom is has increased by 3·9 per cent. However, we should look a little more carefully at the United Kingdom figures. Over half the rise in United Kingdom output is the direct result of higher North sea oil output. During that period, it increased from 1·8 per cent. to 4 per cent. of our gross domestic product.
Can the Government claim the credit for North sea oil? The Conservative party was not in office when investment was made in the North sea oilfields. That investment created the greatest windfall that any Government have inherited in the 20th century. Apart from oil, the increase in United Kingdom output has averaged 1·3 per cent.—a pitiful figure for a Government who have been in office since 1979. None of the countries that I have mentioned has the benefit of North sea oil. We compete with European countries which do not enjoy the benefit of Government revenues in terms of the balance of trade, the balance of payments and the employment that North sea oil has brought to this country.

Mr. Nigel Forman: Why does the right hon. and learned Gentleman insist upon the North sea oil argument? If he were applying the same logic to the American economy, would he exclude their grain exports?

Mr. Smith: North sea oil production and the revenues to be obtained from it happened in 1979. This will not last for ever. There has been grain production in the United States for a very long time and one expects it to remain for a very long time. The hon. Gentleman does not seem to have grasped the point that North sea oil is a temporary phenomenon—sadly so for this country.

Mr. Forman: What does the right hon. and learned Gentleman mean by "temporary"?

Mr. Smith: The hon. Gentleman should read what he has obviously not read: the evidence given by the Treasury and the Department of Energy to the House of Lords Select Committee on Overseas Trade, which shows that 1985 represents the peak of North sea oil revenues and that from now onwards oil revenues will diminish. The Government have grossly over-produced North sea oil. They have been pushing it out of the North sea as though it were going out of style. They need North sea oil revenues to pay for the unemployment that they have created. The devastating verdict of history upon this Government's economic management will he that they have used every penny piece of our North sea oil revenues to pay for the extra unemployment that they have created since 1979.
The figure can be easily calculated. Every person who is unemployed costs at least £6,000. The Government have to pay social security benefit to the unemployed and they lose income tax, national insurance contributions and value added tax. If only 2 million more people are unemployed—of course, more than 2 million extra people are now unemployed—the cost of their unemployment is £12 billion, which is roughly the amount of North sea oil revenues for the last year. That will not be the amount in the coming year, because of the difference in the relationship of sterling to the dollar. It can be proved beyond doubt that that is where the oil revenues have gone.
If somebody had stood on an election platform in 1979 and said that if a Conservative Government were elected, there would be 3·5 million people unemployed, he would have been booed off that platform for exaggerating. If he had stood on the same platform and said that a Conservative Government would use the North sea oil revenues not to make tax cuts or for public expenditure investment but exclusively for the unemployment that would be created in the years to come, he would also have been booed off the platform. But that is what has happened since 1979. It is the direct result of the Government's policies. Industry has wilted under the combination of high interest rates and high exchange rates. British industry has been placed in a monetarist straitjacket which makes our goods uncompetitive abroad and deters investment in this country.
The Government say that there has been a small increase in investment in manufacturing industry. This is because regional grants and capital allowances are coming to an end and many companies are rushing to get in their applications in time. Therefore, there will be a temporary upward blip in the figures. However, from 1987 onwards the incentives will have been removed and there will be a return to the downward trend.
The worst feature of running high interest rates and high exchange rates at the same time is that they reinforce each other in a vicious spiral. High interest rates, which are the result of the Government's monetarist policies, contribute

to the high exchange rate by attracting funds from around the world, thus forcing up the value of sterling. The truth is that the Chancellor of the Exchequer runs financial policies that pay no attention to the needs of manufacturing industry. Day by day, more and more industrial managers are realising this and are saying so. In the meantime, there is a huge outflow of funds from this country to provide investment for the equipment of our competitors. We are providing them with resources so that their workers can have the equipment with which to beat us in our own markets and in Third world markets.
Nevertheless, we are told by Government representatives that to concentrate upon manufacturing industry is a mistake—that we need to concentrate on services. But do they not know, as witness after witness from British industry told the Select Committee on Overseas Trade of another place, that to a large extent the service sector is dependent upon manufacturing industry? Do they not know that only 20 per cent. of our services are internationally tradeable? I am not against services. This country should have as lively a service sector as possible, but we shall not solve unemployment or replace the wealth-creating capacity of our disappearing industries by imagining that this country can live off North sea oil revenues, an expanding service sector and a few profitable industrial centres.
In evidence to the Select Committee, Lord Weinstock said:
what will the service industries be servicing when there is no hardware, when no wealth is actually being produced? We shall be servicing, presumably, the production of wealth by others. We shall supply the Changing of the Guard, we will supply the Beefeaters around the Tower of London. We will become a curiosity. I do not think that is what Britain is about; I think that is rubbish.
I think all hon. Members would say, "Hear, hear," to Lord Weinstock.

Mr. John Mark Taylor: Is the right hon. and learned Gentleman referring to the Lord Weinstock who seems to be accruing cash within GEC and not investing it in manufacturing?

Mr. Smith: I am glad that the hon. Gentleman has drawn attention to the fact that the result of the Government's policies is that Lord Weinstock can make more money by not investing in manufacturing industry. I hope that the hon. Gentleman does not think that he has helped his Government by that intervention.
In the meantime, our trade deficit in manufactured goods increases relentlessly. From a very large surplus in 1980, we are heading in 1985 for a £5 billion deficit in the balance of trade in manufactured goods. The Government appear to be completely oblivious to this. In opening the debate on the Gracious Speech, the Prime Minister concentrated on the slight increase in manufactured exports. There was not a word about imports. How one can talk about trade without referring to exports and imports beggars belief.
Everyone who thinks seriously about this matter is worried about what will happen when North sea oil runs out and we have an appalling deficit in our balance of trade in manufactured goods. In evidence to the House of Lords Select Committee on Overseas Trade, Treasury officials answered that question, presumably with the authority of Ministers. The witnesses said that the gradual decline in North sea oil output would automatically bring about an adjustment in the economy which will compensate for the


loss. As North sea oil output increased, the value of the pound would fall against the other currencies, thus making British goods and services more competitive overseas and improving our balance in non-fuel trade. The witnesses said that the services section would increase and sunrise industries would replace the so-called sunset industries. So we need not worry—the economy will change inevitably and almost automatically. There will be a compensating adjustment, so we can put our fears at rest.
The Government say, "The only people who are asking these questions are those who are seeking to be difficult." The problem with that rosy view of Britain's future is that the connection between North sea oil and the exchange rate is not as automatic as was assumed. Those who wonder about that should look at the evidence given to the Select Committee by the Bank of England. The problem is also that there is no automaticity about replacing so-called sunset industries with sunrise industries. Almost half our balance of trade deficit in manufactured goods is in the information technology industries which are supposed to be at the forefront of the sunrise sector. We cannot necessarily look for salvation there.
Above all, the complacent prophets do not understand that if the industrial base has been disastrously weakened and large parts of it have been destroyed, the capacity of manufacturing industry to respond to a favourable exchange rate and to create wealth on the scale required by the decline in oil will be in serious doubt. We may have all the favourable situations for an expansion in industry but, if there is no industry to expand, it will profit us little. To read the Gracious Speech is to read the words of a Government who seem to be completely unaware of that fact.
The Gracious Speech did not mention the unemployment problem. My hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott) will deal in detail with unemployment measures and the attempt through wages council legislation to force more people into part-time, low-paid jobs. The Government's campaign—it has been orchestrated throughout the whole establishment—to suggest that substantial numbers of the unemployed do not want to work or are not genuinely seeking work is contemptible. [Interruption.] I hear a mutter from an hon. Gentleman who has not yet identified himself. I do not know who said that, but I distinctly heard an hon. Member say, "It is true." That is typical of the Conservatives.
Those who have had the guts to identify themselves include Michael Edwardes. He said that he thought that many people were not willing to work. He has made more money out of not working during the last month or two than anyone else in Britain. He just sits there in job after job which he has taken over, collecting large golden handshakes. He put a fair number of people into unemployment while he was involved in managing British industry.
Best of all among those Conservatives who have identified themselves is the deputy chairman of the Conservative party—that "second among equals"—who told us in his celebrated speech that young people had to get off their butts. During the past two weeks, Labour Members, including my right hon. Friends the Leader of the Opposition and the Member for Birmingham, Sparkbrook (Mr. Hattersley), have been challenged to dissociate themselves from the remarks of various

members of our party. I ask the Secretary of State for Trade and Industry to dissociate himself unequivocally from the remarks of the deputy chairman of the Conservative party. The Prime Minister and other Members of Cabinet have refused to do so.
This is a chance for the right hon. and learned Gentleman to dissociate himself from those remarks. If he does not, we shall know that all the Conservatives believe that, on the principle of collective responsibility, if on no other basis, young people should get off their butts and look for work. I hope that the right hon. and learned Gentleman will take advantage of this magnanimous opportunity to put the record straight—[Interruption.] The Secretary of State for Trade and Industry and the Paymaster General, who are both Queen's counsel, can probably give each other the advice they deserve. I shall see what the Secretary of State makes of that advice when he gets the opportunity.
The Secretary of State has just taken office. His move was unexpected. As lawyers would say, it was not "reasonably foreseeable" that there would be a chain of events that would end up with the right hon. and learned Gentleman occupying his present position. He is being as cheerful about it as he can. He is entitled to be cheerful because he was not demoted. As he well knows, he was promoted from the Home Office to Trade and Industry.
One of the first things the Secretary of State did on being promoted was express concern about regional development policy. He said that, as he came from a northern constituency, he knew the problems especially well, implying that there would be changes in regional development policy now that he was at the helm. There is plenty of room for change. The whole of regional development policy was being destroyed while the right hon. and learned Gentleman was at the Home Office doing damage in other directions. I hope that the right hon. and learned Gentleman will take the opportunity to announce a series of initiatives and will tell us that the Government's policy is to spread prosperity fairly, especially in his constituency.
I hope that the Secretary of State will say something about the steel industry. No other industry in Britain in recent years has been reduced so drastically and no work force has faced such penalties. There are no greater monuments to inactivity than the deserted steelworks. I hope that the right hon. and learned Gentleman will confirm the Government's policy of maintaining the five main steel-making plants. I am sorry that the Government gives them a guarantee for only three years. I do not know why the Government cannot give a longer guarantee. [Interruption.] The Government may think that it is unreasonable to give a guarantee for longer than three years. They may be taking account of the life of a Government. I do not think that it is too much to tell an industry that it is secure for the next three years.
Planning in the steel industry has been based on the assumption—this is clear in the rationale for the decision on the Gartcosh steelworks—that there will be no increase in demand for steel during the 1980s and 1990s. A flat projection has been put forward. If the Secretary of State agrees, let us have no more nonsense about there being no prospective revival of manufacturing industry. If the British Steel Corporation's assumptions are true, the Government's promises are false. I hope that the Secretary of State will meet that point head on and will think again about Gartcosh. He must know by now from


the opinion that has welled up not only in the area directly affected but throughout Scotland—many Conservative Members who share his political views feel this way—that the proposed closure of Gartcosh is a dagger aimed at the heart of the future survival of the Ravenscraig steelworks.
The Government say that we must prove that the closure of Gartcosh will harm Ravenscraig. We say that we cannot take a cold rolling mill out of the middle of an integrated steel-making complex and expect it to be as healthy, vigorous and successful as it was before that surgical operation. One does not need a series of facts and figures to make that point—it is the simplest of points. Gartcosh is not a separate plant but an integral part of the complex. No one part of the country has suffered uniquely—steelworks in Wales, Shotton, Sheffield and the north-east have suffered because of the decline in the steel industry. The time has surely come for us to draw an EI Alamein line around those important industries and say that there will be no more retreats. This country must have a future as a manufacturing country, and without its basic industries it cannot do so.

Mr. Tony Favell: Is it not true that much of the decline in the steel industry has been brought about by the contraction of the motor car industry, and that a great deal of that contraction is due to the wrecking tactics of trade unions involved in that industry, orchestrated by the Labour party?

Mr. Smith: The hon. Gentleman seeks to blame everything in this country on the trade unions. That was the Government's tactic for a long time. Government apologists wondered whether they should say things were bad and the fault of the trade unions or quite good after all. We seem to be on the latter tack at the moment. I do not take the hon. Gentleman's intervention seriously, and I shall explain why when I deal with the motor car industry, which is another of our fundamental industries.
I hope that the Secretary of State will pay attention to the report of the Select Committee on Scottish Affairs when it reports. I do not know what the report will contain, but the Committee has taken a great deal of important evidence. I hope that it will be possible for him to take note of it and for us to discuss it in the House before any irrevocable decisions are taken. On that matter, as with some others, the Government should resolve to listen to representations. This is still a democratic country, at least in form. They should listen with care and attention, especially when a broad section of opinion speaks loudly, vigorously and with obvious sincerity and tells us that the Government are wrong. It does not need a major adjustment of Government policy to make a significant change in that direction. That is not the only matter upon which I believe the Government have been negligent.
As the hon. Gentleman reminded me, I shall deal with the motor car industry, with which we face a serious problem. I should like the Secretary of State to tell us what he will do about the continuing policy of General Motors (Vauxhall) to import cars on every conceivable occasion and import parts for those assembled in this country, so to a large extent the operations of General Motors (Vauxhall) are a mere screwdriver operation.
I am aware that the Secretary of State has voiced his complaints, because I understand that the emissaries sent from the Department of Trade and Industry to the company

did not receive a happy reception. That company has decided that it will follow the policy of its own economic advantage. The Secretary of State knows perfectly well that if such a policy is allowed to continue we shall have no chance of stemming our balance of trade deficit.
I hope that the Secretary of State will make General Motors (Vauxhall) decide to keep some of the promises that it gave the trade unions in 1983—that it would increase production at Ellesmere Port to 35 cars a day. It is now only 24 a day. I hope that the Government will take some action.
I hope that the Government will bear in mind the fact that they are not powerless to deal with multinational companies. The Bedford vans which are supplied to the Ministry of Defence are an important contract for that company. I do not see why the Government should favour companies that follow policies inimical to our economic health by awarding them favourable contracts.
On the subject of trade, I hope that the Government will pay close attention to ensuring that British exporters are sufficiently backed in world competitive markets. I hope that some lessons have been learned from the Bosporus bridge affair. It is widely accepted by all those involved in the sad saga of that contract that if the Government had offered at the beginning of the process the assistance to British companies which they eventually offered at the end, the contract would have been secured. One does not need to say more than that to show that the matter needs to be reviewed.
The supply of vehicles to the Bangkok mass transit authority is another important contract for this country's vehicle industry. I read today in the Financial Times that there is a further difficulty about obtaining that contract. All sorts of problems may be involved.
I hope that the matter will be pressed vigorously by the Government. The knowledge that an important contract, which at the beginning amounted to 4,000 single and double decker buses to be supplied by British Leyland, had been in the air for a long time as the company pursued it, makes it hard to understand why the Prime Minister did not choose to visit Bangkok on her south-east Asia visit. If it were the French Government who were seeking the contract, the French President would have been there before any decision was made by the Government. I understand that the Minister of Trade visited Bangkok the week after the Cabinet had reached its adverse decision. It might have been a little more intelligent to go the week before. If I am wrong about that, I can be corrected, but I believe that I am correct when I say that the Prime Minister did not go to Thailand during her visit to southeast Asia.

Mr. Anthony Nelson: The right hon. and learned Gentleman may, like me, have read some press reports which suggested that the Prime Minister's recent intervention in the Ptarmigan deal was unhelpful. There is a view that in many major contracts abroad, whether public or private, the intervention of senior politicians does not help. That is an important point. What is the right hon. and learned Gentleman's view?

Mr. Smith: What struck me as odd about the Ptarmigan deal was the way in which the Prime Minister prostrated herself in an undignified fashion to obtain it. She left herself open to the result, which was an undignified rebuff.
The hon. Gentleman makes a serious point. We may have a Prime Minister who is not helpful in pursuing Britain's trade. If that is so, the most palatable member of the Government should be selected to be the emissary. If I were to ask the hon. Gentleman to select the most palatable member of the Government to do that, he would be in difficulty. I find it nearly impossible. If not in the Cabinet, there must be someone in the junior ranks who could do the job with reasonable success.
I hope that the Secretary of State will find some time to tell us what will happen in the negotiations for the renewal of the multi-fibre arrangement. Those of us who have taken part in the discussions in the House—it is almost a year since they started—about the renewal of the MFA have been staggered by the Government's laid-back approach. They have wound themselves up with great difficulty to ask for a renewal of the MFA.
The Secretary of State must know that the British attitude is crucial to the European attitude because the United Kingdom is in a pivotal position within the European Community between the unlimited free traders and those who believe that there must be some orderly marketing for textiles. I hope that the Secretary of State will take that point seriously, because there are 250,000 jobs in the British textile and clothing industries. That is a heavy responsibility for any Government to carry when taking part in international negotiations. I hope that we shall return to that subject. The Government's discharge of their responsibilties will be monitored with great care by the Opposition.
I have talked about what the Government have not done. Unfortunately, I must deal with some of the things that they propose to do, because one of their main themes is privatisation, especially that of the British gas industry. The Secretary of State for Energy told us some time ago that there were three reasons for the privatisation of British Gas. The first was that there should be an end to state intervention in the industry's affairs. Secondly, there should be an end to what was called "nominal public ownership", which was to be translated into what he called "real public ownership". Thirdly, there was to be an improvement in efficiency.
It was interesting to note that there was no reference to competition. That is often used by the Government usually incorrectly as justification for privatisation. Even the Secretary of State for Energy is aware that there cannot be any competition when we are dealing with a necessary monopoly that has a pipe system running throughout the country, such as the British gas industry. We have been told that we must privatise to stop state intervention, and that is a bit too much to accept.
Who has intervened more in the British gas industry and manipulated its finances more than the Government? Which Government forced the British Gas Corporation to increase its prices by 10 per cent. above the level of inflation for three years in succession? That was meddling in the affairs of the British Gas Corporation. We do not need to privatise to stop that happening. We need merely to enter into a self-denying ordinance not to continue those manipulations. As the Secretary of State is aware, it was a clever political game.
By the use of the gas levy, about £1 billion a year was extracted from the gas industry. It was a tax on the gas user and identified and known as a tax, but one for which in

the normal way the permission of Parliament was not obtained. The Prime Minister is adept at leaving responsibility on the doorsteps of others, and the odium for the increase went to a public corporation which she dislikes intensely on ideological grounds. It was a smart but disreputable manoeuvre and one which is being perpetuated.
Can the Secretary of State tell us whether the gas levy will be maintained after the British Gas Corporation is privatised? What will be said about that when an offer of sale is made? He knows perfectly well that if he announces the continuation of the gas levy, that will have a considerable effect on the price. He knows also that if the gas levy is not maintained the money will have to be made up by taxation from some other source. We will listen with great care to what the Secretary of State says about that.
There are some serious questions to be asked about employees' rights and conditions, which are likely to be diminished. The notion that I find most offensive is that somehow state ownership of the British Gas Corporation is only nominal. There was an unseemly dispute between the Earl of Stockton and the Secretary of State for Energy about where the family silver was going. The noble Earl got it right, but in came the Secretary of State for Energy seeking to dissociate himself from the very man he introduced and applauded at the meeting at which the speech was made. Characteristically, it was a case of the Secretary of State for Energy appearing in two places simultaneously, urging on the Tory Reform Group and speedily dissociating himself from any remarks which might be to his political harm.
He said that the family silver would be handed back to the family, but what was our experience with British Telecom? In that case the family was regarded as international and there were special allocations of shares in the United States and Japan; 18·6 per cent. of the shareholding of British Telecom is now in the hands of overseas investors who made £180 million in one day as the shares traded up from 50p to 94p. No Government in history have handed to overseas investors £180 million in one day's operations.

Mr. Tony Baldry: It may interest the right hon. and learned Gentleman to know that exactly 39 years ago today, during the debate on the Loyal Address, Winston Churchill described as a preposterous fraud the intention of the then Labour Government to nationalise the gas industry. The surprise is not that we are privatising the gas industry but that it has actually taken us 39 years to denationalise it.

Mr. Smith: I am not sure that that intervention adds much to the debate, because the hon. Gentleman knows perfectly well that in the 39 years that have passed we have created a highly successful gas industry that is a credit to the nation. It is extremely well managed. It has been monitored by all sorts of bodies, such as the Monopolies Commission, and in comparison with other companies, both public and private, it has come out extremely well. It has carried out a massive transition from being a manufacturing industry to being a processing and distribution industry. It has laid pipelines from one end of this country to the other, supplies British industry at competitive prices and provides cheap fuel for the domestic user. The British gas industry has a proud record of success and it is deeply unpatriotic to attack it for the


narrow ideological reasons given by the hon. Gentleman. When one scratches the so-called patriots on the Government Benches one finds that just below the Union Jack there is a hand outstretched to grab the quickest profits that can be found.
The Government are shamelessly raiding the public treasury. It is not good enough for them to talk about handing away the silver. The truth of the matter is that it is not nominal, but crucial to public finance. What will happen to our public finances if we give away the right to profits of £1 billion every year from the British Gas Corporation? That profit and the right to earn it will be sold with the shares. As my right hon. Friend the Shadow Chancellor said earlier, the profit will not be lost for just one, two or three years; that money will be lost in perpetuity to the public exchequer. In the waste of North sea oil and in the sale of assets, we are seeing a double blow to public financing.
It is not as if the money will be invested elsewhere in other income-producing assets, because it has been heavily signalled and is in the Gracious Speech that it is intended for tax cuts. That will build up a huge election fund for the Conservative party. That is why the British Gas Corporation, with assets of £16,000 million and profits of over £1,000 million, will be sold, for £8,000 million most likely, and if the sale is on the same scale as the sale of British Telecom, the payment to the bankers will be £300 million. It cost over £200 million to sell off British Telecom. The result of this seedy and shameful operation is that a major British asset will be handed over to who knows who. One does not know who will eventually buy it. Of course it will be said that it is going to the people, but it is going to only some of the people. All the people benefit from the profits of the British Gas Corporation.
This is an increasingly seedy and shameful Government. They are mishandling the economy, destroying our industry and leaving a terrible inheritance for their successors. If I have one reservation about helping the next Labour Government, it is the magnitude of the task they will face as a result of the depredations of this Government. Sooner or later we will need to plan for the long-term recovery of our industry. We will need to encourage investment in real jobs, and it will be necessary to start again the process of building up our investment, our research and development, and our education and training. The time cannot come soon enough.

The Secretary of State for Trade and Industry (Mr. Leon Brittan): We have heard a great deal from the right hon. and learned Member for Monklands, East (Mr. Smith) about the parlous state of our industry and commerce. We have also heard some flights of fancy about patriotism. My estimate is that the right hon. and learned Gentleman believes in approximately one quarter of what he has said. As ever, the Labour party seems to take enormous delight in running down the state of Britain. That relish might be forgiven if what was said gave a fair picture of the British economy. It does not. My right hon. Friend the Chancellor of the Exchequer described many aspects of what is actually happening in the country.
The right hon. and learned Gentleman tried to make out that the successes, which he says are comparatively recent and the nature of which he does not really deny, are based purely on earnings from North sea oil. He said that will disappear and, therefore, we can claim no credit for the

achievements which, again, he does not really attempt to deny. He claims it is North sea oil alone which is preventing us from plunging into bankruptcy. That is simply not true. The profitability of non-North sea industrial and commercial companies, at a net real return on capital of 6·5 per cent., is at the highest level since 1978.
Manufacturing productivity has been growing at an average rate of 6 per cent. for nearly five years. We are not talking there about North sea oil. Total fixed investments last year stood at £55 billion—an all-time high. Of course, we are all perfectly well aware of and need no reminders or lectures about what happened during the recession. We are recovering from a low point, but in the British economy today the dramatic growth in investment is the most eloquent testimony to the confidence of British business men that the current growth in output is sustainable. Business investment rose 15·5 per cent. in real terms last year, to reach an all-time high.
An investment intention survey, carried out by the Department of Trade and Industry, forecast that business investment this year is expected to rise by a further 8 per cent. to reach a new record level. The right hon. and learned Gentleman produced all sorts of reasons for believing that will come to an end; that the past has to be ignored and the future discounted; but the present is reality and that reality is the investment that I have described. That completely belies the thesis that our current improvement depends first on North sea oil and that, as North sea oil revenues decline, our fortunes will decline in parallel.
North sea oil has indeed provided enormous benefits for the British economy, but it is absurd to give it the role that the right hon. and learned Gentleman has given it. It has not in any sense been wasted. It has brought new prosperity to many areas in Scotland and formed the basis of an offshore supplies industry which will continue to earn money for Britain overseas long after our domestic oil reserves have run out.
North sea oil has made a massive contribution to the balance of payments. It has provided money to the Treasury—[Interruption.] There is nothing wrong with that, as I am sure the right hon. and learned Gentleman found when he was in government. It is ludicrous to ignore the contribution of North sea oil to our economy and to our investment just because the new roads, hospitals and sewers that have been—and will be—built are not labelled "Built out of the proceeds of North sea oil." They could not have been built on anything like the present scale without it.
Of course the oil will not last for ever—it is a finite resource; that is obvious—but to go on to claim that the economy will be unable to readjust to declining oil production is simply unwarranted. Nor is any useful purpose served by exaggerating, as the right hon. and learned Gentleman does by implication, the speed at which oil revenues will decline.
We shall remain self-sufficient in oil until the mid to late 1990s. The rundown in the oil surplus will be gradual, giving the economy time to adjust. Moreover, as a result of North sea oil, we can look forward to a steady flow of earnings resulting from our investments abroad. Those investments will cushion the impact on our economy the decline of North sea oil and help us to adjust it. Yet it is those very investments that the Labour party says it is


determined to destroy by forcing individuals and institutions to repatriate their savings so that they can be squandered on Socialist schemes.
We do not profess to forecast or propose to dictate from which sectors in the economy the main adjustments will come, but one thing is certain: when the non-oil economy arrives, it will not—it is absurd to pretend that it could—be a replica of what existed before North sea oil came on stream. The levels of investment in manufacturing industry that is taking place today makes it quite reasonable to be confident that the manufacturing sector will continue its marked recovery from recession and play a vital part in our economy in the future.
According to the right hon. and learned Gentleman, it is impossible for manufacturing industry to grow because the base has already been destroyed. That statement is completely belied by the figures showing what people in manufacturing industry have been prepared to invest this year and last year.

Mr. George Foulkes: Does the Secretary of State agree that, if there is to be a marked improvement in the economy, that is exactly the reason for keeping Gartcosh open, so that it will be there to provide the necessary steel?

Mr. Brittan: I will come to Gartcosh in a few moments, if I may.
Dealing with the oil argument, I was going on to say that, for the reasons I have given, it is entirely reasonable to believe that manufacturing industry will continue its recovery, but at the same time services will undoubtedly form an increasing part of our economic activity. The resentment about services, such as the tourist industry, that we saw earlier in the afternoon is not only distasteful but economically illiterate. We would do well to accept that a pound of output or export from the service sector is no less useful or worthwhile than that earned from manufacturing.
The Opposition amendment refers to the level of unemployment. Nobody could dispute that it is far too high; but in this area, too, it is only the Opposition who stubbornly refuse to recognise the encouraging signs that are emerging. As has already been pointed out, in the past two and a half years the total number of people in work has increased by more than 600,000, and last year we created more jobs than the rest of the European Community put together. I believe that the measures contained in the Gracious Speech will improve the climate for job creation still further. I am not alone in my confidence.

Mr. David Winnick: Will the right hon. and learned Gentleman take this opportunity to dissociate himself from the remarks of Mr. Jeffrey Archer, the deputy chairman of the Tory party, who, in an interview about the young, said that they are
quite unwilling to put in a day's work. I know what unemployment is like, and a lot of it is getting off your backside and finding a job"?
Is the right hon. and learned Gentleman aware how offensive those remarks were to the hundreds of thousands of people who are denied the chance of working and who have no chance of finding a job?

Mr. Brittan: The hon. Gentleman knows perfectly well that Mr. Archer has himself commented on those

remarks. If the hon. Gentleman is seriously interested in the questions of employment and unemployment which are concerning this House, his reference to remarks of that kind, and dwelling on them in the way that he has, must illustrate that he has reached rock bottom—[Interruption.]

Mr. John Smith: rose—

Mr. Brittan: The Opposition are manifestly becoming restive because I am pointing out some uncomfortable facts about the good news in the economy and the increase in the number of jobs.
I have to tell the right hon. and learned Member for Monklands, East and the Opposition that I am not alone in my confidence about British economic prospects. It is a confidence which is shared by investors the world over. Last year, inward investment into Britain was 86 per cent. up on the figure for the year before. It was the best year for inward investment since the Invest in Britain Bureau was created. Three hundred and twenty separate inward investment projects were confirmed, creating nearly 30,000 new jobs and safeguarding 19,000 others. Last year there were projects which, put together, represented capital expenditure of about £3 billion. Those are the serious points about what is happening in the economy.

Mr. John Smith: rose—

Mr. Brittan: That level of success is being maintained this year. These figures cannot be manipulated and are entirely dependent upon voluntary decisions taken by overseas investors. Whether the Opposition like it or not, they represent a massive vote of confidence in the future of the British economy and the Government's policies.
When I visited the United States a couple of weeks ago, I found that the only thing that worries potential investors about putting their money into Britain is the thought that one day there might be a Labour Government. Happily, I was able to reassure them that such an event was highly unlikely.

Mr. John Smith: Before the right hon. and learned Gentleman scurries away from Mr. Jeffrey Archer, is not Mr. Archer regarded as a fairly responsible official of the Conservative party, being the deputy chairman and having been appointed by the Prime Minister? Why cannot the Secretary of State give us a simple answer? Does he agree with the disgraceful remarks of the deputy chairman of the Conservative party? If he disagrees with them, can he not dissociate himself from them? Can he not do that simply, honestly and clearly?

Mr. Brittan: I regard it as a sign of the trivialisation of the debate by the Opposition—[Interruption.]—that the only point that has excited or interested them in a serious debate on the economy is a statement that Mr. Archer himself has explained very fully and frequently. The right hon. and learned Gentleman should learn that, if he wishes to be taken seriously as a spokesman for the Opposition, he will have to produce something a little more constructive than that. It is significant—the House will not have ignored the fact—that the Archer diversion was raised precisely at the unpalatable moment when the true facts about what is happening to the British economy were being given.
There has been considerable progress not only in industries coming to this country—those overseas choosing to come here in a climate which exists under a


Conservative Government—but in those industries remaining in public ownership for which my Department is responsible.
Let me refer, first, to the British Steel Corporation. I want to deal more generally with the progress of the corporation, but the right hon. and learned Member for Monklands, East specifically raised Gartcosh. The idea that the Government are not prepared to listen is manifestly untrue, to his knowledge, because he and others of his right hon. and hon. Friends have been to see members of the Government who, I hope, gave them a courteous hearing. Trade union representatives have done the same. It is not sufficient to say that, because we have not been able to accept the points that were made, we are not ready to listen. That is not a fair point.
The right hon. and learned Gentleman talked about Gartcosh being a cold rolling mill which was an essential part of an integrated complex. He will be well aware that the information provided by the British Steel Corporation shows clearly and beyond peraventure that in many parts of the world there are plants doing what Gartcosh does which are much further away from the plant that they serve than Gartcosh is from Ravenscraig.
The assurances that were given in August about Ravenscraig stand, and they are to be taken seriously. I hope that the right hon. and learned Gentleman will accept that and will not be a party to the running down of confidence in Ravenscraig caused solely by claims about the connection between Gartcosh and Ravenscraig which cannot be substantiated.

Dr. Jeremy Bray: Can the Secretary of State give an undertaking that the British Steel Corporation will provide answers to the detailed questions put to it by the Select Committee on Scottish Affairs on the specific point about the link between Gartcosh and Ravenscraig?

Mr. Brittan: I understand that the British Steel Corporation will provide more information. As the hon. Gentleman well knows, that must be a matter for the corporation.
I should like to say a word more broadly about the British Steel Corporation, because the future of the steel industry in Scotland, and at Ravenscraig in particular, is dependent upon the future progress of the corporation generally. Enormous progress has been made in turning BSC into a viable and profit-making company. In 1979-80 the British Steel Corporation lost over £1·75 billion, including over £1 billion of excess capacity written off.

Mr. Tom Clarke: rose—

Mr. Brittan: Those who are concerned about the steel industry should heed the figures. Five years later, in 1984–85, if the effects of the miners' strike and exceptional items are excluded, the British Steel Corporation would have made a profit of £40 million.

Mr. Foulkes: On a point of order, Mr. Deputy Speaker. When I intervened earlier, the Secretary of State said that he would deal with the point later. My hon. Friend the Member for Monklands, West (Mr. Clarke), who is the constituency Member of Parliament, has not been given an opportunity to ask an important question.

Mr. Deputy Speaker (Mr. Ernest Armstrong): Order. The hon. Gentleman knows that whether a Member gives way is a matter for the hon. Member who is addressing the House.

Mr. Brittan: I was about to give way to the hon. Member for Monklands, West (Mr. Clarke).

Mr. Tom Clarke: I am grateful to the right hon. and learned Gentleman and to my hon. Friend the Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes).
The Secretary of State has referred to Gartcosh. Does he accept that he has so far failed to convince not just the overwhelming majority of the Scottish people but the overwhelming majority of the members of his own party in Scotland? Tomorrow the Minister of State will give evidence to the Select Committee on Scottish Affairs. In due course, that Committee will report to the House. Will the Secretary of State give an assurance that he will accept the findings of the Committee?

Mr. Brittan: The hon. Gentleman knows perfectly well that no Goverment have ever said in advance that they will accept the findings of a Select Committee, whatever it may say.
I came to the matter afresh and saw the decisions that were made in August on Ravenscraig. I felt that if I could be persuaded that the connection between Gartcosh and Ravenscraig is as Opposition Members have suggested, that would have to be taken seriously. I considered the matter carefully. I have not been persuaded that there is the link which the hon. Gentleman and others suggest. Those who insist on maintaining that it exists are doing a disservice to Ravenscraig and to the steel industry in Scotland and the United Kingdom generally.
The efforts of the steel industry in Britain, to which I wish to pay tribute, were reflected in the outcome of the European Steel Council at the end of last month in Luxembourg, an outcome which should bring cheer to the whole of the United Kingdom steel industry, public and private. I should like to thank my hon. Friend the Minister of State for his considerable role in achieving that result.
At that meeting, Ministers agreed a tough new regime of severely limiting state aid which should protect all United Kingdom producers against unfair competition from continental competitors. The new quota system represents a significant first step towards a free market in steel. It will be of particular benefit to the BSC. The British steel corporation has had to make use of extensive and uncertain ad hoc arrangements over the last two years to maintain its share of the United Kingdom market at a time when the United Kingdom economy was expanding faster than continental economies. That was unfair. The new quota system will give BSC an extra 360,000 tonnes of quota per year. That should consolidate the position that BSC has achieved following the acquisition of Alphasteel without the need for more ad hoc arrangements.
I should like to pay tribute to all in the industry who have made progress possible. In particular, I greatly admire and warmly applaud the determination of thousands of steel workers to overcome the most intolerable intimidation and abuse to keep the steel works going throughout the miners' strike.
Industry is not a homogeneous entity, nor are the problems the same or of equal gravity in different parts of the country. The right hon. and learned Member for Monklands, East was right in recalling what I said at the


Conservative party conference about regional policy. It has a vital part to play in our overall economic strategy. It is now almost a year since the new system for administering regional aid was announced. The right hon. and learned Gentleman was right to anticipate that my concern for regional policy would be reflected in considering the impact of that new policy.
Often in the past, money was given to support projects which were highly capital intensive and produced few jobs. In a few cases those projects even resulted in an overall net loss of jobs, while others were certain to go ahead whether or not they received assistance. Clearly that could not be allowed to continue. Regional policy is about creating jobs in the regions. Under the new system it is targeted to ensure that it does just that.
It is still early days to assess the full effect of the changes, but there are some signs already. As a result of the changes, the west midlands was made into an assisted area for the first time. That provided a classic example of the sort of problem that had to be tackled—a highly urbanised area dependent on industrial centres which have declined. I am pleased to say that, to the middle of last month, 538 applications for selective assistance for the west midlands had been received. Of those, 156 have been approved and 147 are being considered. As a result, grants of over £17 million have been approved to assist projects involving a total investment of over £150 million, which will lead to nearly 12,000 jobs being created or safeguarded.
I should also like to mention one arm of our regional policy—the English Industrial Estates Corporation. Its work is an important component of regional policy. The demand for its factories has grown as we have emerged from recession. On the other hand, income from receipts is not expected to be as high as at one time seemed likely. [Interruption.] I hear a reference from the Opposition Front Bench to proposals for management buy-out. Those are still being considered, and I have no announcement to make about them today. We are increasing the public expenditure provision for the English Industrial Estates Corporation in 1986–87 to £19·3 million, an increase of over 20 per cent. on the previously announced figure in the public expenditure White Paper of this year.

Mr. Paddy Ashdown: Is the Secretary of State aware of the great concern in the Medway towns as a result of the reduction of grants to the English Industrial Estates Corporation? Does he accept that the Government have a duty to carry through the full development project in the Medway towns? Will he undertake to make a statement on the matter in the near future? In particular, will he give an undertaking to the House that the grants to the English Industrial Estates Corporation will not be reduced to such an extent that it cannot carry through a proper development project in the Medway towns?

Mr. Brittan: I have said what the position is with regard to the public expenditure provision for the English Industrial Estates Corporation. There is an increase of over 20 per cent. for the coming financial year on the previously announced figure in the public expenditure White Paper. The hon. Gentleman will appreciate that what has been said about the Chatham project remains the Government's policy, but I have nothing to add to that.
I refer now to the privatisation measures that seem less than popular to the Opposition. Since taking office we have returned 12 major state-owned companies to the private sector. That has been done not out of reasons of dogma or ideology, but because of the belief, which has been borne out by results in almost every case, that privatisation results in greater efficiency and improved performance. I shall give but one example. In British Aerospace, turnover is up by 73 per cent. compared with the year before privatisation, and profits are up by more than 200 per cent.
However, privatisation has meant not just improved performance. In addition, one third of a million employees have taken the opportunity to become shareholders in the firms for which they work. By doing so, they have taken a stake in the future of those firms and shown a positive commitment to their success. It is for that reason that we are proceeding with privatisation.
There is one proposal in the Gracious Speech to which I should refer because it will be the main item of legislation for the Department of Trade and Industry in the coming Session. It is the proposal to establish a new regulatory framework for the financial services sector. The Bill will be based on the proposals in the White Paper published last January. The approach set out there is designed to enhance the efficiency and competitiveness of that vital sector of the economy while at the same time providing additional safeguards for investors.
So far I have concentrated on domestic matters, but I should like to refer briefly to international trade. It is a prime objective of the Government to seek to maintain and extend the opportunities open to British exporters in world markets. Our crucial opportunity for doing so will be the new round of multilateral trade negotiations in the general agreement on tariffs and trade. In recent years trade restrictions have multiplied and confidence that the rules of GATT will be adhered to has been weakened. It is essential that that process should be reversed. We shall strive, together with our Community partners, to revitalise GATT by negotiating reductions in trade barriers, improving the procedures for settling disputes and ensuring that the rules of the system are more widely observed.
I should like to refer to one other aspect of our trade policy, because I know that it is of particular concern to many hon. Members. Discussions with the financial community on soft loan facilities have been successfully concluded. I should like to announce today important changes in the scope and scale of the aid and trade provision—an instrument effective both in providing aid to developing countries and in helping British companies with overseas contracts. Since its inception, some £350 million of ATP grants have been used with export credits to help British companies with 96 projects, with resulting exports worth £1,700 million. Our intention is to make ATP even more effective in future.
First, with the full co-operation of the financial community, we are introducing a new soft loan facility. Banks will make long-term loans at low interest rates available to recipient countries for financing sound development projects agreed intergovernmentally. The Overseas Development Administration will provide ATP funds to the banks to cover the cost of softening such loans.
Secondly, we are increasing the total level of ATP support to enable British companies to double, by


1988–89, the business currently won annually with ATP. The current annual provision of £66 million is at present offered mainly in 25 per cent. grants securing exports of up to £250 million a year. The new loan facility will enable potential exports won to rise to some £500 million a year. The public expenditure costs of the new facility will usually be in the form of interest top ups to the banks spread over the life of the loans. ATP funds are being increased by £3 million, £10 million and £20 million over the next three years in line with the target of doubling the business won.
The introduction of the soft loan facility is in recognition of the preference of certain developing countries, notably China and Indonesia, for project-related financial packages to be provided in the form of single soft loans rather than in combinations of grants and export credits. The facility will be initially for five years and then reviewed. Initial discussion about a £100 million loan facility has taken place with the Chinese Government. Under such a facility, loans would be at 5 per cent. for 20 years, with a five-year grace period. We shall make suitable arrangements for loans with other developing countries where that would maximise the benefits.
These changes will put our companies on a footing similar to that of their competitors in other countries where the Governments already have the flexibility to provide soft loans. Within the Organisation for Economic Cooperation and Development we shall continue to seek more progress towards multilateral controls over these practices, which other countries have initiated. Our facility will be operated within our international obligations. Our major exporting companies have campaigned strongly for this facility, but the projects won will also benefit the thousands of small and medium-sized companies that act as suppliers and subcontractors. I look forward to a strong response from industry to these changes.

Mr. John Smith: The Opposition welcome the Government's acceptance of the request that has been made for a considerable time by leading British exporters for the introduction of soft loans. While I welcome the Government's conversion to that idea and putting British industry on the same footing as its competitors, why has it to be phased in over three years? The problem is here now. Why must there be a three-year delay?

Mr. Brittan: There will not be a three-year delay. The facility is to he available immediately. The three years to which I referred are the period in which public expenditure will increase. It is not surprising that it should build up over the years. If one introduces the measure tomorrow, it is not surprising that the amount that one spends will be less in the first year than in the second or third. There will be a build-up of projects. I am sorry if the right hon. and learned Gentleman misunderstood, but it was unnecessary for him to introduce a sour note because of his regret that this Government are introducing the measure.

Mr. Smith: It is not my intention to be sour. It was legitimate to say that the measure has been requested for some time. The Secretary of State should be grateful for the fact that I was willing immediately to recognise the advantage that would be gained by certain British exporters. I should like to clarify the point about the three years. We listen with care to what the Secretary of State says. If sufficient requests came in, would there be no cash

limiting of any sort and no phasing in over the three years so that, if there were enough projects in the first year, the money would be made available to them?

Mr. Brittan: The right hon. and learned Gentleman is being unreasonable. There is no delay. The scheme is open immediately. To suggest that the amount of money available under it should be unlimited is to ask for something that is absurd. I am talking about doubling the amount that is currently available. The right hon. Gentleman really ought to recognise the magnitude of the change that is being made, rather than make remarks which, if initially not sour, certainly became so.

Mr. Richard Hickmet: I welcome the announcement on ATP, but may I ask my right hon. and learned Friend for an assurance that applications in relation to ATP-type funding will be reviewed speedily? How many Departments will be involved in the consideration of ATP?

Mr. Brittan: They will be looked at speedily, but, of course, there is a developmental aspect of it as well as an aspect that is important for British industry. It would be quite wrong not to look at both aspects. We will look at them as quickly as we possibly can. I look forward to a strong response from industry to these changes.
The Gracious Speech contains a series of measures designed to build on the achievements that we have already made and to encourage further the growth of the prosperity of British industry. The contrast with the proposals emanating from the Labour party could not be greater. A few weeks ago, the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) had the cheek to claim that the Labour party and industry somehow had a mutual interest and that Labour was prepared to listen to industry's needs. If nothing else, he deserves full marks for sheer brass neck.
The truth is that the Labour party's policies, in contrast to those in the Gracious Speech, would be catastrophic for industry in this country. Reckless spending policies, financed by economic irresponsibility, would soon push—[Interruption.] No, our policies are not reckless, because they are limited in amount. Hon. Members know that perfectly well. The right hon. and learned Gentleman has asked for a blank cheque. Reckless spending policies, financed by economic irresponsibility, would soon push inflation back to the crippling levels from which we have escaped. Penal taxation imposed on anyone earning over £20,000 a year would destroy incentives and drive our most talented managers and workers abroad. Repeal of the trade union legislation, for which the Opposition call, would return us to the bad old days when militant and unrepresentative union leaders called strikes at the drop of a hat, with little or no regard to their effect.
Those industries which we had freed from state control would be taken back into public ownership, forcing them to obey the dictates of politicians rather than their customers and the market, and depriving thousands of employees of their shares. Those industries which were allowed to remain in the private sector would be so encumbered with regulation and control that any sign of enterprise or initiative would be snuffed out.
The right hon. and learned Gentleman would certainly create jobs—jobs for hundreds of bureaucrats—but at the same time he would destroy thousands more by driving foreign investors away and choking our own domestic


industry in a mass of red tape and controls. This Government's policies have helped to create an outlook for business which is described in the CBI's report of today as brighter than for many years. The proposals in the Gracious Speech will improve that prospect still further. I urge the House to reject the amendment.

Mr. Roy Jenkins: I sometimes thought that, when the right hon. and learned Gentleman did not seem wholly at home in the Home Office, it was perhaps because the Department did not suit him. However, his fluent lack of conviction is, I think, an art form which he can transfer from Department to Department.

Mr. Brittan: Really!

Mr. Jenkins: The right hon. and learned Gentleman must receive compliments more graciously. I congratulate him, however, on having overcome the vicissitudes of the summer and I wish him well in his new Department.
The Government are becoming an increasingly rum Government. To try and give them close support must be an increasingly disorientating experience for those of their supporters who endeavour to do so. For years they have been taught to worship at the shrine of monetary aggregates. Sometimes the icon changed. Sometimes it was sterling M3, sometimes MO, sometimes whatever it might be. Nevertheless, this was the shrine at which they worshipped. Two months ago, the Chancellor told us that it was all mumbo jumbo and that we must have entirely new forms of measurement.
The Prime Minister, having proclaimed herself for years the prophet of rolling back public expenditure, having re-nailed her colours to the mast at Blackpool by saying, "We will not reflate," then proceeds to regale the Lord Mayor of London with boasts of the Government's colossal programme of public expenditure. I am not surprised that more consistent economic thinkers such as Lord Stockton—[HON. MEMBERS: "Oh!"]—he has, in fact, been remarkably consistent over about 48 years—find it difficult to keep up with this whirligig. Presumably, it exemplifies the Prime Minister's expressed belief that what people dislike is not the policies but the presentation of them.
We are now told, therefore, that everything is set fair for the economy, that steady growth is assured and that private as well as public capital projects are bounding ahead. What is the reality? The picture is not entirely bleak. It would be silly to pretend that it was. The inflation prospect is good, even though the Chancellor slipped in rather quietly this afternoon the news that it will be 0·5 per cent. for this year above his budget target. On the whole, however, the prospect is good, at least until sterling, still so foolishly left isolated outside the European monetary system, takes the full force of the double decline of oil. By double decline, I mean the decline of world prices and the beginning of the run-out of our supplies.
There has been some modest growth for an unusual number of years in a row, but it has been modest and it has not brought back manufacturing output to anywhere near the 1979 level. All forecasts, with the exception of

one private forecast, expect the rate of growth to tail off in 1986 and again in 1987. That is by no means a wholly bad picture, but there is another side to the equation.
First, there is really no sign at all of any significant reduction in unemployment without a major change in policy. I do not think that anybody, except perhaps the Chancellor and perhaps the Secretary of State, for all I know, really any longer seriously thinks the opposite. Unemployment has probably levelled out but at a totally unacceptable figure. Secondly, contrary to what the Secretary of State said, the post-oil surplus prospect—not merely the post-oil prospect, because the oil will take a long time to go, but the surplus, the big balance of payments surplus, which is beginning to decline quite quickly—still looks devastating.
In endeavouring to engage with this argument, the Secretary of State seemed to me to be confusing the balance of payments argument with other arguments. He said that oil is not the only thing in the country that is going well, and that other industries are making big profits. Perhaps they are, but the fact remains that our balance of payments is now overwhelmingly dependent on this highly temporary and massive oil surplus. Our manufacturing industry is shrunken and what remains is uncompetitive. The Secretary of State knows this perfectly well.
We have a manufacturing trade deficit of approximately £11 billion, all of which has built up in the past three to four years. This is containable by oil and by nothing else. Invisibles can take care of about £4 billion or £5 billion but they cannot do the whole job. As soon as oil goes into a neutral position we are in deep trouble. Should it go into a negative position, the situation would be catastrophic.

Mr. Ivan Lawrence: What did the right hon. Gentleman achieve?

Mr. Jenkins: Were there deficits every year when I had responsibility? I recollect that I produced quite large balance of payments surpluses and enabled us, in different circumstances, to repay some Government debt. The hon. and learned Gentleman must make better interventions or he will give lawyers a bad name.
One would have thought that, in these circumstances, the Government might have taken seriously the report of the House of Lords Select Committee. By any standards it was a serious document, compiled by serious people of substance and great experience. Yet so hysterically do the Government resent criticism of any sort that the Chancellor of the Exchequer and the Secretary of State for Trade and Industry went into a paroxysm of denunciation of the report before it was even published.
Those two—the Chancellor and Secretary of State for Trade and Industry—in trying to rebuke for irresponsibility the members of that Select Committee, not to mention Lord Stockton and a number of right hon. and hon. Members, were like two cabin boys trying to quell a revolt of admirals.
On that burning deck the person for whom I felt sorry was Lt.-Commander Walker, the Secretary of State for Energy. He had been flirting a good deal with the admirals—though wishing to keep his lines open with the cabin boys as well—and it was extremely bad luck on him that when he introduced the most senior admiral to deliver a great benediction, under his chairmanship, he found that it was his own departmental policy—presumably about the only policy on which he agreed with the Government—that was under attack.
Even so, he would have been better advised not to deliver his statement of retraction the following morning. Apparently he had not said that it was selling the silver; it was transferring it from the bureaucrats to the people. However, that totally begged the question of what to do with the money, and on that issue the Government's behaviour has been odd indeed.
For years, the country has been crucified on the cross of the PSBR. The fiscal stance has been too tight for our recent circumstances and we should have loosened it significantly, particularly for capital projects. But the Government have firmly resisted that, although now they are in favour of creative accounting—that is the phrase—and they are prepared to use about £5 billion from capital sales to finance current spending—namely, personal tax cuts.
To sell off a chunk of capital assets and to use the proceeds for capital investment in the rest of the public sector might just be acceptable. However, that is not what is proposed, and what is proposed cannot be justified on any reputable theory of public finance; and when it is accompanied by a Minister using the oil—which might itself be regarded as a capital asset; certainly it is not renewable—almost entirely for current purposes, it amounts to improvident finance on a scale that makes the Prime Minister's old friend General Galtieri almost Gladstonian.
However the money is used, I am deeply sceptical about the management and consumer benefits that flow from turning public monopolies into private ones. I hold no brief for nationalisation—[Interruption.]—and on a simple view—

Mr. Baldry: Will the right hon. Gentleman kindly explain which policies of the Labour party—remembering that he was a member of that Cabinet of that party—he now supports? It seems that he was in favour of an incomes policy but not of nationalisation. In which Labour measures has he lost faith? Which policies has he renounced and to which is he keeping?

Mr. Jenkins: It is probably well known that I have never been in favour of any measure of nationalisation since at least the mid-1960s—[Interruption.] I suppose that I may have voted for some of them, but I did so with about as much enthusiasm as the present Prime Minister voted for policies of the right hon. Member for Old Bexley and Sidcup (Mr. Heath).

Mr. Brittan: Does the right hon. Gentlemen think it is credible, creditable or honourable for him to have been a member of a Government in 1974 who embarked on nationalisation measures, which he supported as one of its centre points, and now to say that he never believed in them?

Mr. Jenkins: I said that from the early 1960s I was, on the whole, disillusioned with nationalisation. It was perfectly well known to everybody at the time that there was resistance to such measures in the Government, and it is absolute nonsense for any theory of Cabinet Government—[Interruption.] I do not think the right hon. and learned Gentleman heard the point I was making. With what degree of conviction and enthusiasm does he think the present Prime Minister voted for the policies of the right hon. Member for Old Bexley and Sidcup, all of which she now denounces, as she does those of Lord Stockton, as being all part of the bad past?

Mr. Brittan: Will the right hon. Gentleman now answer my question?

Mr. Jenkins: The right hon. and learned Gentleman wants to turn everybody who does not agree with him into a wild dogmatist the other way. He must learn that there is some sense in having a non-dogmatic approach to some issues.
Although I have no faith in the denationalisation of public monopolies and turning them into private monopolies, I reject the simple view that, by doing that, there is automatically produced the splendid management performance that we want.
The Times report from Paris last Friday on the unfortunate Ptarmigan-Rita affair was interesting, because the outcome seemed neatly to illustrate—"confound" may be a better word—both the Prime Minister's dogmatism and her diplomacy. The report said that the French firm had simply appeared to have done its homework much better than the British and to have adapted more skilfully to American requirements. So much for the assumed automatic superiority of a privately owned firm over a nationalised one. It added that
the crowning 'gaffe' of Mrs. Margaret Thatcher's personal intervention
was all that was required to complete the series of British mistakes.

The Paymaster General (Mr. Kenneth Clarke): Has the right hon. Gentleman yet made up his mind on the way in which he will vote on the privatisation of British Gas? Having given a brief description of certain matters about which he is sceptical, will he tell us whether he will believe in his vote this time, or is he in the midst of another 10 years of votes about which he is wholly sceptical?

Mr. Jenkins: I shall wait until the Bill is produced by the Secretary of State for Trade and Industry. That seems a sensible way to proceed.

Mr. Lawrence: rose—

Mr. Jenkins: The hon. and learned Member for Burton (Mr. Lawrence) is again looking for dogma. He is only at home when he can reach out for dogma to tell him that something is right or wrong, sensible or foolish. He has done that for years.
The Government's answer to the stark prospects of no reduction in unemployment and inadequate manufacturing performance to pay our way when the oil runs out is to get faster and further into the service industries. One evening last week, I listened to a Minister citing, as though it were on a tablet of gold, the fact that 86 per cent. of the employed population of New York is now in the service industries. That is hardly relevent. New York is renowned for its exuberance, even in the richest country in the world. It is absurd to say that New York carries the universal message that to turn Liverpool, Glasgow and Birmingham into little Manhattans would solve their problems.
The relative growth of service industries is inevitable and desirable in advanced economies. A return to full employment, which should be possible, will come about through highly efficient and labour-conscious industry. Around that core we can afford to run labour-intensive service industries, both public and private. That is miles away from saying that in Britain we have not moved far or fast enough away from manufacturing and towards services.
It is nonsense to decry the tourist industry, or any other industry, as second-rate. All industry is valuable. We must look at the overall picture to see whether the balance is right and whether we have moved fast enough. Britain has moved further towards services than have Japan or West Germany. We have moved faster and further than nearly any country except for the United States. It is fundamentally wrong that we have run down manufacturing uniquely and dangerously quickly, not that we have gone too far into services. Until the Government realise that central fact and become willing to listen to the House of Lords Select Committee, the Confederation of British Industry, Lord Stockton, the Opposition, the alliance, the right hon. Member for Old Bexley and Sidcup and the large chorus from other Conservative Members rather than their self-congratulatory voices, their approach will be fundamentally flawed.

Sir Ian Gilmour: The House has heard three good and contentious speeches, but I hope that I shall make one with which every hon. Member can safely agree. The right hon. and learned Member for Monklands, East (Mr. Smith) made an angry complaint about the Government's policy. However, his indignation prevented him from noticing that the policy he attacked is no longer quite there. There is a considerable element of reflation in the Government's policy. The right hon. Member for Glasgow, Hillhead (Mr. Jenkins) said that private forecasters agreed that growth would slow down in the next two years. That is true, but the policy has altered, so their projections are all out of date.
I warmly congratulate my right hon. Friend the Chancellor of the Exchequer on having the courage to change his fiscal policy. The right hon. and learned Member for Monklands, East attacked the Government's privatisation policy. I shall not enter the argument about silver, or even the one about the admirals—the right hon. Member for Hillhead was in naval mood this afternoon, first with rum and then with cabin boys—though I should say that in general I support privatisation. But I emphasise that the sale of existing assets does not provide resources to pay for newly produced goods and services. That is because the sale of assets does not change the net wealth of the private sector. Receipts from such sales do not withdraw purchasing power from the private sector as does, for example, the imposition of more taxation. The receipts change the structure of private wealth portfolios, but they make no significant difference to aggregate demand.
That means that increases in public expenditure and cuts in taxation, which we are promised, are straightforward reflationary measures. Contrary to what the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) said this afternoon, asset sales do not finance tax cuts. They are independent of them. The tax cuts which will apparently be made will contain a considerable element of reflation, and as such I warmly welcome them. However, I doubt whether they will be enough. Some of the reflation will go in the wrong direction. I agree with what my hon. Friend the Member for Milton Keynes (Mr. Benyon) said in this debate the other evening: that most reflation should be done differently and should not be in the form of tax cuts.
I do not understand why the Government say that they are not reflating when they plainly are. Presumably, they are saying one thing and doing another to gain confidence and to reassure the City. But the City is not as silly as that. Indeed, it is not silly at all. I doubt whether it will be fooled by the arbitrary and fairly absurd convention which my right hon. Friend the Member for Worthing (Mr. Higgins) and the Treasury and Civil Service Select Committee have often criticised, whereby asset sales are treated as negative expenditure which reduces the PSBR. I am sure that the City will realise that the Government are reflating. Asset sales reduce the PSBR, but they do not make its funding easier. Indeed, it is possible, in view of what has happened, that interest rates will increase rather than decrease.
We should also realise that there has been some reflation, even while my right hon. and learned Friend the Secretary of State for Trade and Industry was at the Exchequer. The eighth report of the Treasury and Civil Service Select Committee shows that, between 1981 and 1984, there was a significant fiscal expansion equivalent to at least 1 per cent. of gross national product. Although monetary policy has been tight in the sense that real interest rates have been high, it has been generous in that it has allowed a large increase in borrowing by the personal sector. Nevertheless, the reflation that we have enjoyed has certainly been insufficient to reduce unemployment or even, until recently, to stop it increasing.
My right hon. Friend the Chancellor said recently that British industry is healthier today than it was six years ago. Others have gone further and have painted a picture of boom-time Britain. That is rather surprising, because even with limited fiscal reflation there has been no recovery from the recession. I do not like to quote my speeches, but as I said during my speech on the Budget in 1984:
The relevant definition of recovery … is whether the expansion is large enough to bring down unemployment. On that criterion, the recovery has not yet started."—[Official Report, 15 March 1985; Vol. 56, c. 536.]
What I said then remains true. Since unemployment has still not turned down, we have not yet had a recovery.
The more that I examine the figures, the less I find grounds for satisfaction, let alone euphoria. However, in view of the admonition to speak briefly, I shall not weary the House with many statistics. Instead I shall quote from Sir Winston Churchill, who talked about the paradox of "unemployment amidst dearth." That paradox is with us again. Sir Winston Churchill said 60 years ago:
The community lacks goods and a million and a quarter people lack work. It is certainly one of the highest functions of national finance and credit to bridge the gulf between the two. While that unemployment exists … no-one is entitled to plume himself on the financial credit policy which we have pursued.
That is very true today when unemployment is more than double what it was then. Collectively it would seem that we have not learned any more about how to run a modern industrial economy during the past 60 years.
As a result of the reflation now in prospect, given a bit of luck, we should have a decent run for a short while, although I doubt whether it will be fast enough. If we could achieve a growth rate of 3·5 or 4 per cent. next year, unemployment would surely begin to fall steadily if not quickly. The current balance of payments might as a result move into deficit, but in a minor way we could follow the example of the Americans and attract enough foreign


capital to prevent a sterling crisis. That would be a risky venture but it might work and it would certainly be politically attractive.
Yet on its own, such a policy would make no contribution to solving the fearsome strategic predicament we still face. This is apparent if one looks some years beyond 1986. Hon. Members should be grateful to the House of Lords Select Committee on Overseas Trade to which the right hon. Member for Hillhead referred. I was disappointed that the Secretary of State did not refer to that Committee this afternoon, but he had other things to talk about and one should not write other people's speeches for them. I hope that the Government will make a more considered response than either the Secretary of State for Trade and Industry or the Chancellor did before the report was published, or the Chancellor did at one of those City dinners.
The essential message of that report is starkly simple. Britain's trading performance has been strongly adverse—the report does not state this, but it is true—since the early 1950s. The conflict between full employment and inflation would have occurred to a far greater extent in the late 1970s had it not been for oil.
The rise in oil revenue should have made it possible to avoid that conflict. The bonanza should have been used to put British industry on a proper footing and to provide for its secure future. Unfortunately that has not happened and the underlying economic decline has continued. The production of oil is now at its peak and there will be problems, as the Lords Select Committee said. It is unfortunate that that report has come about five years after the moment when the appropriate strategy decisions could easily have been made.
The report states that, unless the deeply entrenched trends in trade change quite dramatically, the recession will get worse during the next decade, with unemployment rising to much higher levels. The Lords Committee does not believe that the necessary change in competitiveness will occur spontaneously, and I agree. The adverse trends became entrenched before the oil flowed and there is no reason to suppose that they will not survive the oil drying up. Indeed, they are likely to get worse.
The Chancellor is engaging in reflation. I greatly welcome that, despite its risks. There is no evidence, however, that the Chancellor has a strategic plan, and that is a cause of grave anxiety. The Chancellor is living from hand to mouth. He is now putting his hand to his mouth rather more often than he did before, which is welcome, but neither the Chancellor nor the nation can continue to do that for very long. The Lords report is right that market forces will not do the job on their own—the past six years have proved that if they have proved anything. There needs to be a national and international strategy to ensure that market forces work benevolently to help the country out of the economic decline and the crisis that it faces. The Chancellor and the Secretary of State for Trade and Industry are both able men and capable of devising such a strategy, but at present they are declining to do so. It is getting pretty late and I think that they ought to start now.

Mr. Michael Cocks: In 1964 I contested the Gloucestershire, South constituency. To my numerous public meetings I took three diagrams. One illustrated the comparative decline of British coal and steel production since the war, a second showed the

comparative decline of our gross national product and the third showed the comparative decline in the British share of the world export market. The decline that I tried to illustrate then has gone on since, remorselessly, and the effect on employment has been devastating.
Recent Confederation of British Industry figures show that our share of the world market for manufactures has dropped from some 16 per cent. in the early 1960s, when I was showing my diagrams, to less than 8 per cent. now. It is estimated that one percentage point drop represents some 250,000 jobs. The increase in import penetration is equally devastating. In 1970 it was some 16 per cent., and I understand that it has increased to some 28 per cent. Each percentage point of that increase represents a loss of 75,000 jobs.
We are all preoccupied with the problems of unemployment and industrial decline. Deep philosophical differences separate the two sides of the House on how those problems should be tackled, but we ought to be able to agree that if we bought more British goods there would be an immediate benefit. We have a large market. If we talk about import controls, we get into a morass of arguments about the general agreement on tariffs and trade and other obscure matters. Most of the political discussion that I have heard revolves ultimately around the amount of resources available and how they should he disbursed.
I recently drove behind a man with a sticker in his back window saying:
Say No to Ratecapping".
There is nothing wrong with that, but he was driving a French car. Had he bought a Metro or a Maestro with some 95 per cent. British content, he would have given someone in Britain two months' work, saved the Exchequer about £1,000 in benefit payments and enabled it to receive income from tax and insurance contributions. The balance of payments would also have been eased and resources would have been generated to put into the kitty for the Government to dispose of.
The Trades Union Congress estimates that it costs some £11,000 to have somebody out of work. That represents an appalling waste of resources. How are we to encourage people to buy British manufactures? General exhortations are no good—I know that from my previous incarnation. We have to deal with specific cases. Can we not agree on some scale of approximate work equivalent for various purchases, even if it is only for a couple of hours, so that when people spend their money they have some idea what contribution they are making to the unemployment problem by buying British goods?
Suggestions such as this have previously led to a lot of nit-picking. I should not be at all surprised if I am reminded that the Maestro has an imported gearbox. Such virtually irrelevant arguments get me down. We usually get acrimonious attacks on trade unions as well. We had a good visual aid of that from the Member for Stockport (Mr. Favell) who introduced a note about activities of unions in the motor industry. I was reminded of young Conservatives in the 1950s who used to jump up and down at the back of meetings squeaking, "Groundnuts."
I am sick of hearing ill-judged, uninformed and prejudiced remarks about working people. If one wants to look for blame, much of it goes to middle management. I am told that there are now production and management systems available that could go a long way towards revolutionising British industry and helping to meet Japanese and other foreign competition.
I shall omit a section of my speech about the secondary education syllabus, in deference to you, Mr. Speaker, but the House will suffer it another time.
If we buy British on every possible occasion, individuals can contribute directly to the well-being of the nation and the solution of our appalling problems.
There is a specific problem that I believe needs urgent Government attention and action. In and around the Bristol area, some 2,000 are employed by Allied-Lyons, which is the subject of an unusual takeover bid by Elders under the direction of the Australian entrepreneur, John Elliott. The world-famous wine firm of Harveys, the largest sherry company in the world, is in my constituency. It employs 450 in Bristol and generates substantial exports and income to the Exchequer through various taxes.
As the Member for that constituency, I received a letter from John Elliott, the Australian who is masterminding the takeover. The letter is dated 9 October and reads:
We respect and appreciate the standard and traditions of companies such as John Harvey, and have every intention of their identity and reputation, which has been built up over several generations prior to their acquisition by Allied-Lyons, being preserved.
Imagine my surprise when in the Financial Times of 2 November there was a report of an interview given by Geoffrey Kent, the chairman of the Imperial Group. At the end of the shareholders' meeting he said that several weeks ago the group had had talks with Elders about joining the consortium to take part in the takeover or, alternatively, buying various bits of it when it was butchered. The group was particularly interested in the wine and spirits, off-licences and restaurants.
The bid is summed up in words of a letter that I have received from the branch secretary of a large section of Allied-Lyons at Clevedon, near Bristol, which employs about 500. The secretary of the Bakers, Food and Allied Workers Union says:
As you may imagine, the prospect of being sold off to whom we know not, is the cause of some grave concern to all employees of Hale-Trent Cakes. We are writing to seek your support and assistance in resisting this bid which would appear to be nothing more than asset stripping.
The Elders literature concentrates on the Allied-Lyons shareholders. It says nothing about the 60,000 employees, who are presumably expendable if necessary. Even the offer of equity shares to public house managers turns out on inspection to be a pig in a poke, because the brewery will do the valuation.
I believe that the bid is against the national interest for a number of reasons. Apart from employing 60,000, Allied is a heavy investor in the United Kingdom and last year its capital expenditure was about £150 million. The pieces which were sold off will probably be bought by existing competitors and if the process is repeated it could soon approach a monopoly. Allied is in international competition with north American and continental groups and carving it up will damage its ability to compete. The heavily geared Elders operation would leave the business carrying a heavy debt. That is a burden that will inhibit further investment and lead to a minimum tax return from the ex-Allied companies for some time.
There are long-standing rules of company law that prevent a company from providing finance to acquire its own shares and it is not possible to tell whether the

proposed action breaches those rules. Much of the matter is shrouded in mystery and Mr. Elliott should come clean about it.
We are told that this activity is a prelude to a political career in Australia for Mr. Elliott. It is grotesque that British workers and British industry should be jeopardised and asked to act as a finishing school for his aspirations.
The Government claim that they believe in competition. I ask Ministers to consider that Australian legislation protects Australian businesses' insular position and that the Australian Foreign Investment Review Board precludes counter-attack. That means that Mr. Elliott can come out from his Australian stockade, like some latter-day Kerry Packer, immune to retaliation and pick off companies around the world, if he can manage it, knowing that, in effect, he is safe in his own castle.
The bid, which is backed by foreign banks, is the first in Britain on such a scale. It can be financed only by asset stripping and the consequent destruction of many types of jobs and industries. Regrettably, this sort of bid, which involves loading business with excessive debts, is already prevalent in the United States. The Government should refer the bid to the Monopolies and Mergers Commission and consider urgently how to deal with the problem. They must surely realise the dire consequences that swathes of British industries will suffer if this sort of depredation becomes commonplace and takes off. I ask the Government to be as robust in protecting United Kingdom jobs and industries as some of our partners in the EEC are in protecting jobs and industries within their borders.

Mr. Kenneth Warren: It is an honour to be called after the right hon. Member for Bristol, South (Mr. Cocks), who renders such service to the House. It was always a pleasure to know that he was dealing with the Opposition's affairs. Now he leaves the Labour party "coxless" and up the creek without a paddle, as has so often been the case.
I shall contribute to the debate by taking up early-day motion 29 and making a short speech. It was a delight to hear my right hon. Friend the Secretary of State for Trade and Industry announce that soft loans would be made available, something that the Select Committee on Trade and Industry commended to the House months ago. I hope that the loans will be implemented swiftly and will be examined continually to ensure that they are relevant to the scale of demand in China and Indonesia, for example, and in other parts of the world where our competitors—not only customers—make the terms and conditions for the sale of goods, especially manufactured goods.
I know that my right hon. Friend the Secretary of State has been exercised somewhat by the report from another place on overseas trade. It follows a report which did not exercise his predecessor so much, unfortunately. That was produced by the Select Committee on Trade and Industry and was directed to the problems surrounding the import and export of manufactured goods from and to other nations in the Common Market.
The report on overseas trade from another place extrapolates that which many of us said in this place over a year ago. I do not disagree with the report, but we must pay attention to the way in which Britain's competitive manufacturing base is being eroded. If we are having success in service industries, that is very good, but we must ensure that that success is complemented by equal


competitiveness in manufactured goods. There have been so many occasions when we have believed that we can substitute when there has been no substitute for jobs that have been lost by those who have given their lives to them. These employees have often served long apprenticeships and have experienced long periods of training for particular jobs of work within areas of our economy where we should be competitive and where, for reasons which are debatable, we are not as competitive as we should be.
The problem is not a recent one and it cannot be assigned to a certain Government or a certain party. The problem has been with us throughout the century. At the beginning of the century we were at the top of the league of success in world exports of manufactured goods. We were followed by the United States, France and Italy, and Japan was not even mentionable. We are now faced with problems that are entirely our own despite a high level of competence and a base of manufacturing capability that should be able to respond competitively to world market opportunities.
I say to my right hon. and learned Friend the Secretary of State, who addressed himself surprisingly quickly to the report on overseas trade from another place, that we are not faced with a party political problem and that we must not talk down our manufacturing industry. I declare an interest as an industrialist and an engineer. I am conscious of the ability of the British people to succeed and we must chalk up our achievements. At the same time, it is wrong to give the impression that we do not have problems. I am aware that productivity has increased and that tremendous advances are being made in electronics and biotechnology, but there are many areas, such as the steel industry, where encouragement from the Government at a critical time, such as the present, could turn markets in our favour, especially in the EEC, as decontrol comes into being at the beginning of the next calendar year.
As times change and industries evolve, we should examine the results that we get from contributing to various industries. In Hastings and Rye we have many employment difficulties although we have a very good farming industry and an excellent fishing industry. In general terms, the Government subsidise agriculture in this country to the tune of £3 billion when the gross domestic product achieved by that industry is about £7 billion. Manufacturing industry, which produces 10 times that output for the benefit of this country, receives only about £1 billion in support from the Department of Trade and Industry. The ratios are not sensible. That is in no way to denigrate the tremendous efforts and productivity of British farmers, but we should surely put our money on the horses that provide maximum employment and revenue for this country.
Two industries cause me especial concern. The first is often debated in the House and is a difficult subject. I do not pretend to be an authority on the textile industry, but in the past five years that industry has gone from a deficit of about £50 million to a deficit of about £1 billion and has lost 150,000 jobs. Those two sides of the equation must be taken together. I am not saying that we could have protected the people involved because in the end the customers have the right to make the decisions, but we cannot afford to neglect a situation in which dominance in a particular home market can be eroded by Government failure to consider ways of stimulating and thus protecting the industry.
At the other end of the spectrum, in information technology, we now have a deficit of £1 billion per year. That is not common sense in the country that invented the computer. Having spent about 25 years in the computer industry, I am conscious of the high standards of science and technology that can be provided. The right hon. Member for Chesterfield (Mr. Benn) will recall times when he was involved in promoting that industry. The deficit of £1 billion reflects about 25,000 jobs that ought to be in this country. Strangely enough, that is also the total number of vacancies in the industry. We are not equating what Government can do with what is needed in this country in terms of the supply of people who can bring to these industries and therefore to their country output that will counteract the enormous inflow now taking place but which we do not really need at all.
The percentage net imports of electronic products is a problem in the United Kingdom but not in the rest of the Common Market. In the past four years the percentage has risen from about 17 per cent. of our needs to about 30 per cent. of our needs while the level in the rest of the Common Market has remained roughly the same. We are tending to import equipment that we should be able to produce from our own resources as a result of investment in our education system.
The Confederation of British Industry has produced a report which I understand is to be debated at its forthcoming conference in Harrogate. That report refers to all kinds of good and bad things in the British economy. It refers to the strong base of large companies, the strong international customer base, the fact that English is recognised as the major business language and the energy benefits already debated today. It also refers, however, to our poor investment record and the failure of our education and training systems to meet the needs of modern business. In my constituency I was horrified to find that in one of the principal comprehensive schools teachers acknowledge that business studies are taught in terms of jobs that are no longer available because the school does not have the equipment to relate its teaching to the jobs that are now available. I also came across an A-level language teacher who did not even have a blackboard.
Responsibility for investment concerns the whole of Government. It is not just the responsibility of industry. Industry is suffering severely from problems caused by high interest rates. This is clearly shown in a recent report by the Federation of British Electrotechnical and Allied Manufacturers Associations dealing with research and development in small and medium-sized firms. I recently asked my right hon. Friend the Prime Minister whether she was aware of the growing concern in the scientific community about the erosion of our science base. This is not just important at university level but concerns the way in which the industries themselves are responding, as the report shows.
The federation received responses from 116 companies, 67 of which indulged in no research whatever although they were involved in the electronics and electromechanical industries at the sharp end of technology. Those which invested in research did so out of revenue because they could not afford to use borrowed money. Only when gross profits were between 25 per cent. and 40 per cent. on the product sold were the companies prepared to borrow money. That creates an uncompetitive situation. The Government must realise that high interest rates are stopping people investing and thus creating the seed corn


fields of the future. I have said this many times before but I say it once again. I often wonder whether speeches in the House of Commons are ever actually heard.

Mr. John Silkin: The hon. Member for Hastings and Rye (Mr. Warren) rightly stressed the need for investment in industry and I hope to follow him on that in a moment.
The Gracious Speech states:
my Government will do all in their power to encourage the growth of new jobs.
That is the sole evidence that the Government are aware that there is an unemployment problem. Even then, the Gracious Speech talks about the growth of new jobs but makes no mention of measures to prevent the destruction of existing jobs.
Like all hon. Members, I look with anguish at the unemployment figures in my constitueny. Total registered unemployment in Deptford—this understates the real position—is 8,000 or nearly 21 per cent. That is more than 7·5 per cent. higher than it was at this time last year—so much for the new jobs that the Government talk about. Registered unemployment has been appallingly high since the last election in that area—four miles from the Palace of Westminster and from the very centre of our country. I accept that my constituency has special problems and that its unemployment figures exceed those in the rest of the country, but in the United Kingdom as a whole unemployment now stands at more than 13 per cent.
In May 1979, when the Prime Minister was busy castigating Labour for not working, the average rate of unemployment was under 5 per cent. In the intervening years there has been a galloping decline in manufacturing, as though there were an inescapable link between the growth of unmployment and the decline of manufacturing industry. The Chancellor says that we should not worry, that there is real evidence of recovery and that everything in the garden is lovely—allowing, of course, for seasonal adjustment. The chairman of the Conservative party would add, "And subject also to the usual bicycle ride on the part of the unemployed."
If people are to get on their bikes, it is a fair test to discover whether the bike industry is leading the recovery of which the Chancellor speaks. Britain's largest bike business is Raleigh. Five years ago it was making a 4 per cent. profit on sales. That figure is still with us, but today it is a 4 per cent. loss, and the Tube Investments Group, of which Raleigh is a part, has cut its total jobs in Britain from 50,000 five years ago to 23,000 today. Today, the Conservative party chairman's father might have to go abroad to get his bicycle, let alone to find work.
The Chancellor's claim that investment is recovering rings hollow when one looks at the figures. During the recess the Central Statistical Office published its annual blue book showing what has been happening to the real level of manufacturing investment. Even allowing for depreciation of plant and equipment and for industry's growing preference for leasing rather than buying equipment outright, the evidence still is that net manufacturing investment has in real terms been negative for four consecutive years.
British manufacturing industry is still spending so little on new plant and equipment that it is failing even to replace the proportion that is wearing out, let alone to reequip and modernise so that it can keep up with our competitors. Four consecutive years of negative net investment is even worse than in the depths of the 1930s recession, when real net investment was negative for three consecutive years. That is critical evidence of Britain's continuing weakness.
Investment is the key to modernisation, the introduction of new technology and new products. Our weakness in all the non-price areas of design, quality, service and delivery dates is losing British firms their market share at home and abroad—and all these flow from lack of investment.
The CBI has just produced some alarming figures on British competitiveness, but being priced out of markets because of rising costs pales into insignificance compared with these non-price considerations. That is the reality behind Britain's appalling trade deficit in manufactured products. Without the revenues from North sea oil, the situation would be desperate. Whatever the Secretary of State may say, and however much the Chancellor may sing an optimistic song, the oil revenues are now passing their peak and are beginning to decline. Henceforth, it will be harder and harder for the Chancellor to disguise the truth about Britain's predicament.
The kindest thing that can be said about this Government is that they are not trying deliberately to destroy our industry and our people's livelihoods. That is coming about not through some well rehearsed plan but out of sheer incompetence. The ship of state is not being steered by the compass or even by dead reckoning—the Government appear to be relying on Halley's comet. Yet if we are to have a chance of survival, it is planning—and imaginative planning at that—that we require.
Three things should be set in motion immediately. First, we must reverse the squeeze on public spending and industrial investment. Secondly. we must increase total spending in the economy to give firms a reason to expand production and to create jobs. Thirdly, we must protect and maintain the core industries on which the survival of our country depends. A nation that has allowed its steel, coal, shipbuilding, shipping and heavy engineering industries to decline is as defenceless in peace as it would be in time of war.
The place to start is with a programme of house building, road building and renewal of our sewerage systems, to put the construction and civil engineering industries back to work. We need Government action to encourage manufacturing industry to invest. Boosting total spending in the economy is critical, but direct pressure on big business through planning agreements could help to steer industrial investment and the jobs it creates to the areas where those jobs are most needed. Clearly, there would be no point in stimulating spending if that merely allowed imports to be sucked in and to create jobs abroad rather than at home. Therefore, we must be prepared to control the growth in manufactured imports to the level that we can afford.
We can put together a coherent package that would change Britain's course from cutback and decline to modernisation and expansion if we have the imagination and courage. Nothing less will meet the crisis that we face. Unfortunately for our country, the Gracious Speech well demonstrates that the present Government have neither the capacity nor the will to achieve it.

Mr. Charles Morrison: Explicitly or implicitly, I shall refer to some of the points made by the right hon. Member for Lewisham, Deptford (Mr. Silkin), but I hope that he will forgive me if I do not refer to them now, simply because time is short.
In the last few days we have heard the most remarkable outpouring of optimism from the Prime Minister, the Chancellor of the Exchequer and my right hon. and learned Friend the Secretary of State for Trade and Industry. Indeed, it was welcome to hear the Prime Minister last night enumerate what was being done in terms of public expenditure, just as it was welcome to hear the Chancellor and my right hon. and learned Friend the Paymaster General today describe how they were setting about some measure of mild reflation.
Nevertheless, I hope that that optimism remains laced with realism. If it does not, it could lead to complacency, and only too often in the past we have seen what happens to Governments who become complacent.
Much has been done by this Government, but there is still infinitely more to do. No one should detract from their achievements and successes, but in politics as achievements are chalked up, other problems appear and develop on the blind side. Unless they are aware, alert and prepared to evolve policy to take account of those problems, the Government will be remembered for their inability to cope with them rather than for their earlier successes.
Problems there are in plenty. We have been debating them since last Wednesday, and today we are debating the problems that are in the very capable hands of my right hon. and learned Friend the Secretary of State for Trade and Industry and my right hon. Friend the Secretary of State for Employment, ably abetted by the Paymaster General. They are also aided by tidal waves of advice from many directions. I do not intend to hold back, but shall try to reinforce some of that advice.
The two factors most relevant to this debate are that since 1978–79 unemployment has risen by 8 percentage points—from 5 per cent. to 13 per cent.—and that since 1983 the balance of trade in manufactured goods has moved into deficit. To some extent those two factors are connected. In the last six years manufacturing industry has lost a quarter of its work force.
When considering manufacturing, we now have the benefit of the recent comprehensive and detailed report of the House of Lords Select Committee on Overseas Trade. That report was provided with an immediate imprimatur by the Chancellor of the Exchequer, who said of it:
The Government … wholly rejects the mixture of special pleading dressed up as analysis and assertion masquerading as evidence which leads the Committee to its doom-laden conclusion. We equally reject its principal remedy—that British manufacturing industry should he protected by a cocoon of subsidies.
With that recommendation from the Chancellor of the Exchequer, a mass of people, who might otherwise have disregarded it, rushed off to read, learn and digest what was contained in the report. But those who have read it have discovered that it contains no special pleading and that if there is a principal remedy it has little to do with a cocoon of subsidies.
I cannot understand why the Government are so much on the defensive about the report. It seems to be a constructive and helpful contribution. Furthermore, it is not commenting upon just the last six years. As my right

hon. Friend the Member for Chesham and Amersham (Sir I. Gilmour) pointed out, it comments upon what has been happening during the last 30 years. The report could be misconceived, but when the Association of British Chambers of Commerce considers that
both the Chancellor of the Exchequer and the Secretary of State for Trade and Industry were rash and unwise to 'rubbish' the Lord's findings",
and also points out that
Britain is unique amongst the major industrial nations in not having by 1984 regained her pre-recession level of manufacturing production",
and when the exalted Anglophile New York Times writer, Mr. R. W. Apple, Junior, after eight and a half years in London, writes:
Six years after Prime Minister Margaret Thatcher took office, proud old Britain … remains a nation in decline'",
we should sit up and take note. It is always more important for a Government to pay attention to the judgment of others about what is happening and about what they are doing than to their own.
It is true that manufacturing production has decreased as a proportion of gross domestic product in many, if not most, of the developed countries, but in none has it declined in absolute terms, except in the United Kingdom, despite recent improvements. I find it positively frightening that United Kingdom manufacturing production was still lower, by 4·3 per cent., in 1984 than it was in 1975, whereas in Japan it was plus 61·4 per cent., in the United States plus 41·6 per cent., in West Germany plus 16 per cent., in Italy plus 22·1 per cent. and in the Netherlands plus 22·7 per cent.
My fear is not mollified by the growth in oil output. As has already been emphasised several times today, it is ephemeral. Nor am I mollified by soothing Treasury theories, to which reference has already been made by the right hon. and learned Member for Monklands, East (Mr. Smith), about the assumed effect on the value of the pound, and therefore exports, once oil declines in importance, for that is far too hypothetical for comfort. In any case, the theory will be nonsense unless manufacturing capacity is built up now.
Nor do I place overmuch faith in invisible exports saving our skins, for I concur with the chairman of the British Invisible Exports Council who told the House of Lords Select Committee that his organisation did
not see this growth of [invisible surpluses] as being to a major extent a substitute for decline in general industrial activity.
Let us do all in our power to develop the benefits and successes of our invisible trade, of banking, insurance, shipping and tourism. What my right hon. and learned Friend the Secretary of State for Trade and Industry said today was welcome, but we still must have a thriving and expanding industrial sector if we are to maintain our standard of living, our National Health Service, our education system—all facets and foundations of our national existence.
What is to be done? The Government alone cannot supply the answers. The House of Lords Select Committee emphasised that point. The Government alone cannot change national attitudes, but they can give a lead; nor alone can Government be responsible for changes in the education system, for the level of wage settlements, and therefore competitiveness, or for the quality, design and delivery of goods on time. However, the Government have a part to play. As the report says, they can take the initiative in formulating a national industrial policy which


makes for faster growth in manufacturing. What is more, the Government can and must look at and learn from the experience of our leading competitors. Why is West Germany's surplus on trade in manufactured goods so enormous? Is it simply because, according to a National Institute study, labour productivity, at least in some comparable firms, is 63 per cent. higher than it is in the United Kingdom? Or is it partly due to the extent and type of support for industry that is given in West Germany? In 1981 it totalled no fewer than 113 billion deutschmarks. That is not an inconsiderable sum for an allegedly free market Government. But there are just as many lessons to be learnt from the French, the Italians, the Japanese and the United States. None of them operates a free market. All of them rig it, to the advantage of their country, their industry and their levels of employment; so we, too, must be a little less purist in our attitude to industry.
The Government should have as their objective that never again should a witness before a parliamentary Committee say, as did Sir Hector Laing to the Select Committee of the House of Lords:
The present Government has in effect made a virtue of not having a vision of the future of British industry, and a positive policy of distancing the State from the industrial sector.
Instead, the Government should react to what he said thereafter:
I think the Government should acknowledge that the nation does have an industrial problem in which it has a serious policy interest. A clear indication that the Government is ready to give a strong lead by, for example, launching an industrial priorities exercise, could prove very effective.
Lastly, apart from raising the threshold, it seems to me to be totally inappropriate to make any across-the-board cuts in income tax, at least for the time being. Not only would it draw in imports, but it would mean that less money would be available for research and development—squeezed all too much already—for export promotion, for action that the Confederation of British Industry says is required now to stop further decay in Britain's infrastructure, and also for overseas aid and, thereby, the creation of new markets.
Furthermore, it would be politically misconceived at a time when, albeit wrongly, people believe that public services are being cut just when they are in great need of improvement and when the vast majority of people want them to be extended. In any case, I believe that to cut income tax now would be to send out the wrong signals to the British people.
The state of the nation may be much improved, but nothing should be done to imply that we can relax. If my constituents and my own constituency Conservative association are anything to go by, there is a conviction throughout the country that, for the time being, every spare penny should be aimed directly at reducing unemployment.

Mr. Ron Leighton: It is a great pleasure to follow the wise and constructive remarks of the hon. Member for Devizes (Mr. Morrison). The Government's attitude towards unemployment has undergone a number of changes. Six years ago they criticised the Labour Government and said that Labour was not working, although unemployment had then been

falling for two years. Their 1979 election manifesto promised more genuine, new jobs. The Gracious Speech, on 15 May 1979, stated:
My Government will give priority in economic policy … and create a climate in which commerce and industry can flourish … and increased employment in all parts of the United Kingdom."—[Official Report, 15 May 1979; Vol. 967, c. 48.]
That was the prospectus when the monetarist experiment began. The opposite has happened.
There began immediately a dramatic, remorseless, unremitting and continual increase in the number of men and women without work, and now that number is higher than Britain has ever known. Then the Government's attitude changed. They said that the increase in unemployment was temporary—even a sign that Government policies were working, that a leaner, fitter Thatcherite economy would take off and produce jobs, but that it would take just a little time for the policies to work.
As the years went by, a number of optimistic statements were made, especially by such people as the present Chancellor—that unemployment had peaked and had reached a plateau and would now fall. It is now clear that all that was moonshine, that they did not know what they were talking about, that they were wrong, that monetarism was an utter failure and that the Government's policies had inflicted a disaster on Britain unparalleled in peacetime. They have completely destroyed large parts of British industry. As a result, between June 1979 and June 1983, 1,700,000 manufacturing jobs were lost. That unnecessary carnage and man-made disaster is the main cause of the present plague of unemployment.
Manufacturing output now is less than it was in 1979. We have gone backwards. This manufacturing disaster is not just the main cause of unemployment; it is the main reason why the Government feel that they can no longer afford the welfare state or finance the public services which our people need and which would create more jobs.
Confronted with the remorseless increase in the numbers out of work in each of the past six years, the Government's attitude changed again. Instead of repeating that the solution was around the corner, the Government, seeing that the solution was not going to come and that their policies had failed, gave up and washed their hands of the problem and, in a volte-face, declared, "Unemployment has nothing to do with us. We are only the Government." Of course, that is not what the Conservative party said at election time, but that is the new doctrine. Bankrupt of ideas, the Government say, "We can do nothing. Do not blame us; blame the unemployed."
In recent weeks, a gloss has been put on this. In the run-up to the next election, the presentation of this matter has been put in the hands of that great philosopher, original thinker and story-teller, Jeffrey Archer. His remedy and solution to the problem is to assure us that it does not exist—that the problem is an illusion. Leading a chorus, including Sir Michael Edwardes, Mr. Archer has callously defined the problem out of existence, mocking, belittling and making fun of the jobless. He has made the brilliant discovery, and assured the rest of the population, that the unemployed are not really unemployed at all—they are work-shy, malingerers, spongers, living happily on state benefits, or fraudulently working in the black economy. That is the new line being sedulously peddled.
Lord Young has joined in. We cannot question him in this House, but we can read his speeches. He referred to the annual labour force survey which found that 940,000


claiming benefit had not sought work in the previous week. We are expected to make the heroic assumption that they are not really unemployed. That is ludicrous.

Mr. Peter Lilley: Will the hon. Gentleman give way?

Mr. Leighton: I ask the hon. Gentleman to forgive me. I shall not give way because we do not have much time.
If people live in depressed areas and are out of work for six months, one year or two years, is it any wonder that they become discouraged? However often they cycle around on their bikes, they learn that the jobs are not there. Those workers are being realistic. Older people, with few or redundant skills, fear that they will never get a job. The survey found that, if they were asked, "Have you looked for work in the previous month?", another 400,000 people would have to be added to the figures.
The most important finding of the survey is the confirmation of the vast number of hidden unemployed—those who are jobless and looking for work but who do not appear in the official figures because they cannot claim benefit. About 850,000—almost another 1 million—should be added to the figures. There are also the men over 60 who no longer have to register to claim benefit; there are those who have retired early because there is no work; and there are another 600,000 on special employment measures. Instead of, as mendacious, weasel-worded Conservative propagandists pretend, the official figures overstating the tragedy, waste and misery of unemployment, they grossly under-estimate the dimension and gravity of the evil that has been inflicted on us.

Mr. Lilley: rose—

Mr. Leighton: Any truthful and realistic measurement would give us a figure of about 5 million unemployed. It is a disgrace that the Government seek to obscure and distort the truth.
Another myth that the Government are stooping to spread is that the unemployed are not really unemployed because they are all hard at work in the black economy. Lord Young is again to the fore, declaring:
By far the greatest number of long-term unemployed live in the south-east alongside employers who say they cannot get people.
He says that the number of vacancies in the south-east is the highest in Britain. We are invited to believe that those people are not really working or looking for work but are engaged in the black economy. That is sheer confusion. Surely he must know that the explanation is perfectly straightforward—that there are more people living in the south-east. About a third of the United Kingdom's population and work force live there, yet only one fifth of those who have been out of work for more than one year. In other words, there is a larger percentage of the population and a smaller percentage of the long-term unemployed—the opposite of what Lord Young was trying to suggest.
There is more. Why are there vacancies in the southeast? That is explained in the October issue of Employment Gazette, published by Lord Young's Department. More than half the vacancies—a higher proportion than elsewhere—are due to skill shortages. There is just no one with the skills to do those jobs. This approach is an insult to every one of the unemployed. Surely the first thing the Government owe them is the truth.
We come to the much trumpeted 600,000 new jobs that have allegedly been created. What are the facts about the

Government's record? Between December 1979 and March 1983 2,125,000 jobs were destroyed. Between March 1983 and June 1985, although the employment figures continued to rise, there was an increase of 260,000 employees. The latest tally is that there are 1,865,000 fewer people employed than when the Conservative party came to office.
How is it possible for there to be a modest increase in the number of employees without this reducing unemployment? Is this not a paradox? The explanation is that virtually all those employees are part-time. If they do just a couple of hours' work, they count as one unit. Many of those people are doing second jobs and therefore are counted twice. The 1984 labour force survey revealed that 450,000 people had second jobs and 250,000 had self-employed second jobs. The survey showed that this practice was growing. It accounts for a large part of the increase.
Another explanation of the seeming paradox is that these part-time jobs are taken by the hidden unemployed, many of them women. The Government have fallen victim to their own trick of excluding those people genuinely seeking work but who cannot claim benefits. They may exclude them but they still exist, demonstrating again that the Government woefully underestimate the extent of Britain's unemployment.
In addition, married women who are taking these part-time jobs are overwhelmingly the wives of employed husbands—not unemployed husbands—so the growth in the number of part-time female jobs has not helped the unemployed. In an attempt to reach the propagandist figure of 600,000, the Government have to refer to the classification "employed labour force" which includes the self-employed on whom the Government have no firm figures. They can only guess, and they make the huge assumption that since 1981 there has been an unprecedented increase of 393,000. There is no hard evidence for that. Instead, the Government make optimistic assumptions and projections which automatically add thousands to their weekly figures of the employed labour force. If these people really exist, does anyone else know about them? For example, will the Inland Revenue and national insurance branch confirm their existence from their records? Today, I tabled a written question to the Chancellor on this matter. I look forward to receiving some corroboration.
The Government insist that many of the unemployed are not really without work but are up to their necks in the black economy. Sir Michael Edwardes has taken the estimate of the size of the black economy, deduced that 2 million people might be involved, assumed that all of them are allegedly unemployed, and simply cut the jobless figure by 2 million. If the Government succeeded in making the whole of the country believe that myth, they would solve much of their problem. The truth is that all the evidence, the studies and empirical research have shown that employed people are more likely to be involved in the black economy than those who are unemployed. It is primarily employed people who are moonlighting. Some of them may sit on the Tory Benches.
The evidence shows that to participate in the black economy people need tools, materials, transport and a network of contacts. In other words, it is not the unemployed who are benefiting from the black economy, but those who are doing well already and who are moonlighting in addition.
For the future the headline figure for unemployment each month should now appear to go down because of the Government's special employment measures—an extra 100,000 people on the community programme and two years of YTS. What cannot be denied, whether by Jeffrey Archer, Sir Michael Edwardes or Lord Young, is that the Government have presided over a staggering increase in mass, multi-million, chronic long-term unemployment with all the waste, misery, heartache, despair and social breakdown that that brings.
For that, after six years, the Government stand condemned. We have unused capacity, unused abilities, unused people and unused capital available. We have enormous unsatisfied public and private needs. Is it beyond the wit and intelligence of man to put those together? That is the challenge before us. We eliminated unemployment in the years between 1939 and 1945 to produce weapons of war. Why can we not do the same to produce the necessities of peace? Things will never be well in Britain until we do. Things can never be well while the unemployed are shut out by our society.
To achieve a sense of one nation, one society, one community and a sense of cohesion, of national solidarity and of commonwealth for all our citizens, all must share, all must benefit, all must work and unemployment must be diminished. As this Government have not managed matters better after six years, it is time that they made way for a Government who will.

Mr. Alistair Burt: During last year's debate on the Gracious Speech I tried to draw the attention of the House to the problems of a northern industrial constituency where the pain of unemployment was evident, not so much through the pages of the newspapers as on my doorstep. I feel that it is time to address the problem once again, this time from the point of view of trade and industry which are the cornerstones upon which employment in my constituency depends.
The first point to make clear is that there has been a change of attitude by the Government over the past 12 months. We can refer to the speech made last night by my right hon. Friend the Prime Minister and to that made by my right hon. and learned Friend the Secretary of State in Blackpool recently, when he clearly and unmistakably put his finger on the problem of the divide between north and south. For the first time, perhaps, a member of the Government made it clear that he was not afraid to address the regional problems of changes in industry. Perhaps for too long the Government have tried not to address those problems. They thought that, in some way, if they mentioned the problems caused by the changes in industry which produced unemployment, by implication unemployment would be laid at their door. That was not my right hon. and learned Friend's attitude. The Government are not responsible for unemployment, but it is their responsibility to deal with the unemployment caused by the inevitable changes in this country's trade and industry.
For the two years before this change in attitude, colleagues in the north of England sometimes thought that they were crying in the wilderness about the problems of the north of England. I feel that that has changed. We now think that the Front Bench have heard something of what we have said.
My constituents have always been open to argument and persuasion. There is no doubt that my constituency has seen changes in its industry. When my father first came to Bury as a general practitioner just after the war he could tell when it was Bury holiday week because it was the first time in the year that he could see the town. At other times, smoke from all the chimneys would cover the town. Now, the clean air legislation and fewer chimneys have ensured the Bury's beauties can be seen all the time.
The people of Bury have recognised, therefore, as decade has followed decade, the inevitable changes in their industries. It was noticeable that the CBI's recent statement to the Select Committee of another place mentioned that Britain's manufacturing decline was not a sudden event but the product of several decades.
Because the people of my constituency are not fools, they are unlikely to be swayed by many of the Opposition arguments. They remember Labour's unemployment record—never leaving office with unemployment lower than it was when they began. They see the futility of high-spending policies that rely on money that cannot be produced and that must eventually hit them hard in their pockets or in their jobs. They have a long memory. They remember the country's near-bankruptcy, when it went to the IMF, in the years 1974 to 1979. They remember the large public sector cuts and the winter of discontent. Matters may have been difficult and bad in my constituency from time to time, but they are never so bad that my constituents would be tempted by the arguments advanced by the Opposition.
Over the past 12 months, Bury has seen some changes. We became an assisted area once again last November. That has resulted in a payment of £120,000 through regional selective assistance. We are also a textile closure area. I have a list of all the firms in Bury that have benefited over the past year from that scheme. Some £500,000 has been directed to Bury. It has resulted in about £3 million of investment. Those are the types of schemes that create jobs, which the Government have been bad at making much of. but they exist and are genuine. They mean jobs.
Bury, Ramsbottom and Tottington have turned the corner. There is now a need to talk up the area. It is easy to talk somewhere down. Private investment is returning to Bury. The amount of private investment coming in is plain to see when I visit industries in the town. The town centre of my constituency is a busy, bustling shopping centre on a Saturday morning. People are possibly attracted by the free parking policies of the Conservative-controlled council, something that is rare in greater Manchester. It brings in people from miles around. The retail and services sectors have compensated for the manufacturing decline.
The town has learned a hard lesson over the past two years. Management and work force realise that no longer are there two sides in industry. If this Administration's period of office since 1979 has done anything, it has spelled out to industry that management and work force must co-operate and work together. "Us" and "them" should now only mean "us" as British and "them" as foreign competition. For boardroom and workbenches the consequences of not co-operating are dire. That has been realised by all the better firms in my area.
The town's work force has responded sometimes by going for years with no wage increases and at other times low wage increases in manufacturing industries suffering


difficulties. The work force has realised that it must play its part. Industries that survive can achieve much by management and work force coming together and realising that they have common problems.
That change is unlikely to have been achieved without the problems and difficulties that have been suffered since 1979, without industry coming to grips with the decline that has been occurring for several decades, as mentioned by the CBI in its evidence to the Select Committee of another place. The decline was not sudden. It has been coming for a long time. If they are asked carefully, most of our constituents know that. They are not, therefore, fooled by claims that the decline has been brought about by Conservative policies followed since 1979.
It would be unfair if I did not respond to the balance of the debate, which has been about our anxiety for British manufacturing. The retail and services sectors in my town have picked up immeasurably. Even so, by no stretch of the imagination will Bury become the pizza and hamburger capital of the north of England. It must always depend on certain elements of the manufacturing sector, and it is time to ensure that the Front Bench realises that the cries of manufacturing industry are not cries of "Wolf' but cries about views that are passionately held. The Government must listen to those cries.
My argument is that perhaps the economy is rather stronger than the Front Bench is prepared to recognise, and some options that may be open to the Government to help employment are not as risky as they think. There is no doubt that the fight against inflation must continue. Few industries, and only a few people on the shop floor, feel any different. However, it is necessary to review some of our policies and in bringing public spending from the darkness into the light we are finding the virtue of spending money on projects that really matter rather than wasting it.
There is certainly further work to do in manufacturing. The British Chamber of Commerce report entitled, "British Manufacture in Decline 1975–1984" showed only too clearly what has happened in recent years. The most recent Manchester chamber of commerce and industry survey showed, sadly, a decline in orders in the last quarter after an encouraging 12 months. Almost anybody one speaks to in manufacturing industry will mention the problems of unstable exchange rates and high interest rates. It is important for the Government to realise that they must take those factors into consideration. Despite the good things happening in the economy, those are two basics that they must address. They have addressed many things with confidence and certainty and produced many good things. To address those two things will be of great assistance and will improve no end the credibility of the Government in my constituency.
The textile industry is looking for a firm stance by Government on the multi-fibre arrangement. The paper industry is looking for a firm stance on energy prices. All industries are seeking to ensure that Government play no part in increasing any of their basic costs and therefore ruining their competitiveness. In the past 12 months the record on that has been good. I thank the Government for that, but the pressure must be kept up.
Some years ago the noble Lord Wilson of Rievaulx, on one of his many television programmes, urged people to keep a small check list of prices behind the clock. Perhaps he had to sell the clock or more likely the right hon. Member for Cardiff, South and Penarth (Mr. Callaghan)

sold the clock to cover the debts that the noble Lord had left. I should like the Secretary of State for Trade and Industry to keep a small check list for industry behind his clock. He should see in his dreams a ball sitting on a football pitch about 10 yards out from the goalmouth. In his dreams he should rush towards it and, if he keeps his check list in mind, he will ensure that he is kicking the ball in the right direction and not hoofing it backwards towards his own goal.
First, my right hon. and learned Friend should ensure that costs to industry are continually reduced and that the Government play no part in putting up costs. Secondly. he should recognise that the future of high-tech is as much in the traditional manufacturing industries as in the high-tech industries themselves. He should be alert to the need for manufacturing industries to invest in capital projects in high tech. Not all the people who wish to have capital investment are covered by the Sullom Voe complex. Capital investment is needed by manufacturing industry to retain jobs and the use of high tech in traditional manufacturing industries has been of tremendous benefit in my own constituency.
Thirdly, my right hon. and learned Friend should ensure that the Government's current commitment to the improvement of the infrastructure continues through improvements in roads, railways, and communications. That is the lifeblood of future industry. Fourthly, and perhaps most important, he should accept the word of industry about unfair foreign competition rather more readily than his Department does at the moment. All too often there is a long period of checking to see whether the allegations made by domestic industry are true, and by the time that is done the boat has gone and unfair foreign competition has triumphed.
I was pleased at what my right hon. and learned Friend said today about making sure we were as competitive as our foreign rivals. It is essential that he makes sure that his Department is aware of that. We cannot afford to slip up too often. He mentioned changes in the aid and trade provision programme. Some of these problems have hit my own constituency in recent years and a significant change in the Government's attitude to that would be warmly welcomed. Fifthly, he must encourage a better attitude in education towards manufacturing industry. For too long industry and trade have been looked upon as dirty, and something that clever people were not supposed to go into. Schools and universities have not emphasised trade and industry as much as they should have done, and progress towards ensuring a change in that attitude is essential.
Lastly, my right hon. and learned Friend must ensure that industry has a real partnership with Government. Having an industrial strategy need not mean massive Government intervention. The Government should recognise that some of the most successful economies in the western world are in countries where, although free enterprise has been given a full rein, Government have kept a close check on what has gone on. They have not intervened as such, but Government and industry together have had a strategy and a vision for the future. There is no reason why we should not do that.
I should like to return to a comment I made at the start of my speech. Speaking at Blackpool the Secretary of State said that his priority was to see the great regional divide in our country narrowed as quickly as possible. He was not afraid to say what many people have thought for


some time but have shied away from saying. It was a refreshing and bold statement and he knows full well he will get support from the Tory Benches as he puts into practice what he has preached so well. At last, we in the north know we have not been forgotten. The visit of his predecessor to the north of England at the start of the summer to see the new industry that was coming from the old, and the new challenges that the region was facing was a good step on the road to the Government's rehabilitation of the north of England.
If the Secretary of State can show himself as a robust defender of British industry, a fighter for fair competition in Europe and the wider world, a responsive listener about the concern of manufacturing industry, and an active partner in the common problems that beset manufacturing industry and the Government, he will have earned the thanks and support of Bury and us all.

Mr. Tony Benn: I should like to talk about the problems we would face if we tried to restore full employment in Britain. It has not been touched on by any Government speaker because the restoration of full employment has never even been a Government objective. [An hon. Member: "Rubbish."] It is not a Government objective and no Minister has ever spoken about the restoration of full employment. The problem of unemployment is a wide one and goes well beyond an economic debate. There is the tragedy of young people in Liverpool who have not worked since they left school and have no prospect of work, and the women who are doing part-time low-paid jobs and who will be affected for the worse by the change in Sunday trading.
Unemployment has an impact on the amount of money available for the public services and on the amount of money available for local government. There is also the effect of unemployment on the ethnic communities. But there is another aspect of unemployment and that is the cost. It is very simply costed, because the Government spend £7·5 billion a year on unemployment pay. The loss of taxation and national insurance as a result of 4 million unemployed is another £12·5 billion. That is £20 billion basic, but then there is a loss of production by the people who are unemployed.
If we take it as a reasonable assumption that people in work could have at least 80 per cent. of their production matched by those out of work, we are talking about another £52 billion of production if we had full employment. With so much suffering and so much cost, why have this Government abandoned the objective of full employment?
When I first came into the House 35 years ago this month, the idea of maintaining full employment was a consensus point. Harold Macmillan has now appeared in the House of Lords commenting again, but of course all Conservative leaders—Churchill, Eden, right through to the noble Lord—accepted that the maintenance of full employment was one of the central points of policy. It is fair to say that the policies pursued by the consensus Governments that followed one another did not succeed. That is why I do not listen with enthusiasm to Harold Macmillan while others do.
That was the objective and now that objective has been dropped. The fact that it has been dropped is not an

accident. I have never accepted the idea of what is sometimes called Thatcherism. I do not believe that it is about monetarism, and I do not believe that political decisions are taken by going into a room with a cold towel round one's head and looking at a calculator to find out what the PSBR will be. After looking at the experience of the consensus years, the Government decided that they needed the dole to discipline the work force. That is what it is about.
The hon. Member for Bury, North (Mr. Burt) said how happy people are and that they are all at one. What has happened is that the fear of unemployment has given management a power that it has not had since the 1920s or Victorian times.
Unemployment performs vital economic functions. It keeps wages down. If a worker goes to his employer and says, "I cannot live on the money," the employer will say that there are 4 million people on the dole who will be happy to do the job. For the same reason, unemployment weakens the unions. It undermines the public services, which are costly. The Government do not want to finance them. Unemployment justifies rate capping and, of course, it boosts profits. If wages are kept down, marvellous profit figures can be produced, and it is the profit figures that make the Cabinet confident, because they do not intend to go back to full employment and do not believe in doing so.
To restore full employment, it would be necessary, with 4 million unemployed and a five-year Parliament, to create 1 million new jobs a year. That is what it would take to get back to what was the consensus of all parties in Parliament for 40 years.
I take up the point made by my hon. Friend the Member for Newham, North-East (Mr. Leighton). Twice in my lifetime we have created 1 million new jobs a year, all funded by public expenditure. The first time was from 1938 to 1942. It was public expenditure on rearmament at the end of the 1930s that gave us 1 million new jobs a year. That was when the PSBR was 27 per cent. of the national output—10 times what it is today. If people are taken off the dole, put into armaments factories and taxed on their earnings, the project finances itself. It was done by very strong central direction and by public expenditure.
I do not need to stress to the House that rearmament was not done by private expenditure. Granny did not buy a Bren gun, mother did not have a tank, and father did not buy a Spitfire with an A registration. It was all done by the Government. People say that Government cannot create jobs. Of course they can, if they wish to do so.
The second example was from 1945 to 1948, when we brought 3 million service men out of the armed forces and put them back to work. It was the biggest example of defence conversion that there has ever been. Compared with it, the problems of defence conversion that an incoming Labour Government would face would be simple. In Bristol, my old constituency, the Bristol Aeroplane Company, as it used to be, stopped sending out trucks with Blenheim bombers and a few months later it was producing prefabricated houses. That was done by having a central control over the economy. The powers were there and the objective was clear. The powers were used. If we want to restore full employment, it will not be done by tinkering about with the PSBR.
I did not hear the whole of the speech of the right hon. Member for Glasgow, Hillhead (Mr. Jenkins), but anyone who thinks that joining the European monetary system and


going back to an incomes policy will get us back to full employment is absolutely wrong, because those actions are simply tinkering on the margin. If we want to get back to full employment—the objective that we should set ourselves in Britain, for a range of social, political and economic reasons—we shall have to do more than that. We must re-equip and re-establish British manufacturing industry by direct methods. It is no good speaking about industry as if it is an optional extra, assuming that if it loses it can be closed down, as if manufacturing is like white side-walled tyres—one has it if one can afford it. We have got to have industry.
One of the reasons why the Japanese are so successful is that they look ahead for 10 or 20 years. Any sensible planning of a modern society would include the planning of investment in high technology industries and in the maintenance of what are now called the smokestack industries, mainly to justify closing them.
Next, we would have to refurbish and develop the infrastructure. I am often amazed when I see industrialists whose whole market depends on public expenditure calling for cuts in public expenditure. Hon. Members will know the old joke in the construction industry that sewage is their bread and butter. When sewers are renewed and when bridges are built, there are jobs for the construction industry, and we need a modern infrastructure, but that would involve public expenditure.
Next, we would have to expand the public services. If it is said that now that we have the microchip there is no demand, I could take any Member of this House, as other hon. Members could, to hundreds of houses where there are old people. In the modern jargon, they are now called the psycho-geriatrics. They are simply a bit old and confused. They need homes to live in; they need 24-hours-a-day care. To meet their needs would create jobs. We need day centres. We need creches so that women can be released to go to work or to college. No one can persuade me that Britain is not full of things that need to be done. Just as rearmament brought us back to full employment, so the expansion of the public services can bring us back to full employment.
If technology allows us to achieve the necessary national output without seven days a week of backbreaking work, let us have earlier retirement and a shorter working week. Let us raise the school-leaving age, and enable adults to go in and out of education. If we wish to do those things, we shall have to plan our trade, for if we reflate the economy when we have not a manufacturing base we shall be flooded, not with imports of the raw materials or engineering products which will be needed, but with consumer products.
If people had to wait a little longer for a Honda but could get a hip operation a bit sooner, what would be wrong with that? That is the sort of priority we would have to set. Unemployment is a form of import control. An unemployed person cannot afford a Japanese video, French wine or American tobacco. The Government have import controls, but they apply only to the unemployed, the low-paid and the people living on supplementary benefits.
We would have to stop the export of capital. Since the Government came to power, for every family of four, £4,300 has left Britain. The Chancellor of the Exchequer says that we must tighten our belts because that is the way to solve the problem. But if a worker tightens his belt, the employer sends the money to South Africa, where the

wages are lower still, because Botha's police will not allow the unions to organise. The export of capital could not continue if we wished to solve the unemployment problem.
We would also have to ease the arms burden. I have already mentioned Japan, but people do not often talk openly of the fact that the Japanese spend only 1 per cent. of a much bigger national income on defence. We spend 6 per cent. Why are the shops in Britain full of Japanese videos, cameras and motor cycles? It is because that is what the Japanese produce. Our Government's hopes are based on tourism and selling battlefield communications systems to the Americans. We have abandoned the serious intent of being a major manufacturing nation. That policy would have to change.
The Secretary of State for Defence comes to every household every week and takes £24 off a family of four to finance the defence burden.
We would have to deal with the treaty of Rome. We could not solve any of the problems under a constitution which makes it illegal to intervene with market forces.
We would have to have a major expansion of public responsibility and control over our economy.
I do not believe that anything less than the measures I have outlined would bring us anywhere near to the achievement of full employment. The Government do not want it. The wets could not get it, although they tried. The SDP-Liberal alliance thinks that if we squeeze the wages in Whitehall, join the European monetary system and have a federal Europe, full employment will come automatically.
The Mitterrand dash for growth came a cropper because he did not really deal with the power structure. His economy zoomed up and fell flat. Mitterrand's policy failed because, apart from anything else, he could not escape from the treaty of Rome. The treaty of Rome and the way in which it operated brought down the French economy.
To achieve full employment, we need fundamental changes in our policy and in our thinking. If this House is to be a forum for the nation, one of its functions is to tell the people outside that we cannot have full employment simply by tinkering with the economy. If we want full employment again, we have to set the objective and take the powers to bring it about. We must have the courage to implement it. That is what the choice will be when the general election comes. It will not be much influenced by whether there are a few tax cuts, purchased by selling off public assets. The choice will be a basic one. I have a feeling that, after their experience with this Government, the British people will be ready to take it.

Mr. David Knox: Because of the shortage of time, I hope that the right hon. Member for Chesterfield (Mr. Benn) does not mind if I do not take up the points he made, tempting as that is. He may be surprised to hear that I am concerned about a return to full employment, but my route to that objective would be different from the one he has been talking about.
My right hon. and learned Friend the Secretary of State for Trade and Industry and my right hon. Friend the Chancellor of the Exchequer both painted a bullish picture of the British economy when they spoke earlier. That may have impressed the City and some of the national press.


I doubt if they impressed many others, particularly those living in the north and those engaged in manufacturing industry, far less those who are unemployed.
It is very difficult to accept that the economy is prospering when over 3 million are out of work. It will continue to be difficult to accept that all is going well until such time as unemployment starts to fall, falls substantially and looks like continuing to fall. I see no sign of that at present.
As an economic problem, unemployment involves a scandalous waste of resources, lost production and lost national wealth. As a social problem, unemployment is divisive and undoubtedly contributes to social unrest. That is why unemployment is the principal problem facing the Government in the current Session of Parliament, as it has been for several years. Against that problem the proposed legislative measures of the Gracious Speech pale into insignificance.
For 30 years immediately following the war, we had full employment. Over the last 11 years, under both Labour and Conservative Governments, we have seen unemployment rise from under 500,000 to its present unacceptable level. Some choose to blame the policies that were pursued in the 30 years immediately after the war. Others try to heap all the blame on the Government headed by the Earl of Stockton, even though it is 22 years since he ceased to be Prime Minister. I think both those are absurd propositions. It is much more likely that the increase in unemployment in the last 11 years has been because of the policies pursued during those years. In a word, the increase in unemployment since 1974 has come about because of the lack of economic stability abroad and because of the pursuit of monetarist policies at home, with their consequent demand deflationary effects.
If we are to make any impact on the level of unemployment—that should be our highest national objective—we must try to stabilise the international economic environment in which we operate as far as that is possible and we must raise the level of demand in our domestic economy. I regret that there is no mention of either in the Gracious Speech.
In the first 25 years after the war we had relative stability in exchange rates under the terms of the Bretton Woods agreement. It provided the countries of the world with a stable international economic order in which their economies could expand. It was particularly beneficial to a country like Britain which has to export a high proportion of its national income to pay for necessary raw materials and foodstuffs. In the early 1970s unfortunately, Bretton Woods broke down, with disastrous results.
In recent years currencies have fluctuated violently. We have seen the value of the pound rising and falling by terrifying amounts over comparatively short periods, with consequential disruption to our domestic economy. At one moment that has made our exports much too dear; at another it has made them too cheap. Again and again when I have visited manufacturing firms in my constituency I have been told of the damage that has been done to their trade by constant changes in the value of the pound.
Although high exchange rates can be damaging to manufacturing industry, it is the constant changes in the exchange rate that do most damage. That may not be perceived by the Treasury as a problem. It may not be perceived by the City of London as a problem, because

money can be made in the City from currency fluctuations, but it is a problem for those whose primary functions are to design, manufacture and sell products and who rarely have an interest in high finance. The present position is therefore very unsatisfactory.
I do not believe that it is possible to negotiate a new Bretton Woods now. It should be an objective in the long term but this country can do something to help itself immediately, and that is, to join the exchange rate mechanism of the European monetary system. That would provide us with much greater stability for 60 per cent. of our trade than we enjoy now. Once we were full members of the European monetary system we could start to play a part through the European community in trying to negotiate with the United States and Japan an even wider area of international stability. Such stability can only be in the interests of this country. I hope, therefore, that the omission of any reference to the EMS in the Gracious Speech does not mean that another year will be allowed to pass before we join the exchange rate mechanism.
Full membership of the EMS would not in itself result in a return to full employment although it would help. A substantial increase in the level of demand in the British domestic economy would be required to take up the slack and bring people back into jobs. Without an increase in demand there can be no significant increase in employment. Without an increase in demand, the work that my right hon. and noble Friend the Secretary of State for Employment and my right hon. and learned Friend the Paymaster General are doing will have little or no effect on the level of employment. The jobs that their policies create will merely replace jobs that disappear elsewhere. If the public, individually or collectively, do not have the means to buy more goods and services, there will be no demand for more goods and services and consequently no demand for extra labour to produce them.
Nor will demand rise automatically. The Government and only the Government can do anything about the general level of demand in the economy. They can raise demand by reducing taxation whilst not decreasing public expenditure, or by increasing public expenditure whilst not increasing taxation, or by a mixture of the two. Put more simply, the Government can increase demand by increasing the public sector borrowing requirement. It is nonsense to suggest that that would be inflationary, for there is plenty of spare capacity in the economy.
Now that my right hon. Friend the Chancellor of the Exchequer has discarded that symbol of monetarism, M3, I hope that his next step will be to discard the medium-term financial strategy. If that is asking too much, perhaps he could take a more relaxed attitude towards it. If he does not, there can be no hope of a significant reduction in unemployment. We need reduced taxation to encourage increased private consumption and we need increased Government expenditure, particularly capital expenditure. While it would be foolish to embark on an immediately massive reflation, we should be aiming at a growth rate of 5 to 6 per cent. a year, generated by expansionist Government economic policies. Unless we get something of that order we shall not make a real impact on unemployment.
There is urgency about taking such action for balance of payments reasons. In the years ahead North sea oil will have a diminishing effect on the balance of payments. The longer we leave off the necessary expansion of the


economy to reduce unemployment the more risky it becomes in balance of payments terms. So for every reason urgent action is required.
There is one final point that I should like to make. I made it in the debate on the Gracious Speech in 1983 and again in the debate on the Gracious Speech last year. At the last general election, the electorate gave the Government the benefit of the doubt over unemployment. They were not satisfied with the Government's performance, but they did not believe that either of the other two parties would do any better. At the next general election, if unemployment is not falling, there is a great danger that the British people will conclude that the Government have had their chance and that the time has come to give one of the other parties a chance, even if they are not totally convinced that that other party can do any better. I would regret that as much as any of my right hon. and hon. Friends.

Mr. Dick Douglas: I do not propose to comment generally on the speech of the hon. Member for Staffordshire, Moorlands (Mr. Knox) because time is short. His opposition to the Government's policy made it difficult to see why he should vote against our amendment.
We are having an artificial debate because we have had the Chancellor's autumn statement and tomorrow it is proposed that we debate the economy, as if a debate on industry and employment was remote and detached from a debate on the economy, and as if macro-economic policy was remote and distant from micro-economic policy.
I come from a constituency with a varied industrial base. I should like to refer to the mining industry. Last year, when we were in the middle of the mining dispute, there was harsh and brutal management in the Scottish coalfields. The managers dismissed more than 200 Scottish miners because of their activities in the dispute. Fortunately, there has been a change in personnel in the National Coal Board in Scotland and there have been moves to re-engage some of the miners who were branded as criminals by the then director. I would not place too much on the hope, but I hope that the process is accelerated and that all the 200 miners dismissed during the dispute return to work. The harshness of industrial management as exhibited by the coal board at that time should not be perpetuated into the future. I take the point made by my right hon. Friend the Member for Chesterfield (Mr. Benn). It is not right for the Government to use unemployment and harsh industrial techniques as threats against the labour force.
Several hon. Members have referred to the importance of oil in the economy. I shall try to set my remarks in the context of the Government's view of oil. The Brown Book of 1985 gave the following figures. The total disposals of United Kingdom continental shelf oil in 1984 amounted to 125 million tonnes and 45·4 million tonnes were delivered to United Kingdom refineries, constituting 60 per cent. of the total delivery of United Kingdom refineries. A total of 24·2 million tonnes of foreign crude was imported during the year, compared with exports of United Kingdom continental shelf crude of 77 million tonnes.
Oil has been used not so that we get a balanced fuel or energy policy but simply to provide Government revenues and, of course, to bolster the balance of payments. There

is no other reason for our producing oil in such excessive amounts. The Government have abandoned any thought of a depletion policy.
Let us examine other economies with no domestic production of oil such as West Germany and Japan and how they took the shocks of 1974 and 1979. There was an impact on their balance of payments, but their strategy was different from that pursued by Governments of both political colours in this country. The Labour Government borrowed against potential oil production. The Conservative Government have used oil to bolster the balance of payments. However, West Germany and Japan did not narrow their industrial manufacturing base but broadened and deepened it. If anyone has doubts about that, he should read the report of the Select Committee on Overseas Trade in another place, which said succinctly in paragraph 23:
The ten countries with which the United Kingdom had either the largest surpluses or the largest deficits in 1984 are shcwn in Table 2.7. Generally speaking, with one or two exceptions, surpluses have been achieved with less developed countries and deficits incurred in more developed countries. It is perhaps worth noting that the worst trade balances in manufactures are with West Germany, Japan and Italy, and that the worst of all is with West Germany.
West Germany is a nation without the benefit of oil.
I do not wholly share some of the views expressed by Opposition Members. I do not think that there will be a dramatic turn-round in production. The Government's figures are reasonably secure. There will be a small slack, but the problem is like a drug addict coming out of his addiction. How should we tackle it in balance of payments and exchange terms? We must also consider what is happening to other aspects of the international oil market.
We are in a farcical position. The production of Norway and ourselves has exceeded that of the Saudis, and on occasion ours has been more than that of the Saudis. If we move to cheap oil, nations such as Germany and Japan, having secured their industrial base, will get the benefit. If oil becomes cheaper, production in the North sea will be adversely affected, as well as Government revenues. We are in a Catch 22 situation. That would be extremely damaging particularly because we have adopted a policy of letting our manufacturing industry go. We could not recover overnight.
If we had used the revenues from North sea oil to enhance our productive capacity in future, one area of prime concern would have been the allocation of resources to research and development expenditure in the United Kingdom. Have we done that? There is no evidence of it whatsoever. I quote from the presidential address made to the British Association in August of this year by Sir Hans Kornberg:
During the year 1983/84 the five Research Councils spent just over £480 million and the UGC £551 million. If one assumes that roughly one-third of the UGC's expenditure was for the support of research, the total expenditure for research from the DES was roughly £664 million.
That is DES research expenditure which should be financing industrial innovation in the future. We did that for education-based research. But what did we spend on research and development for the Ministry of Defence? We spent £2,000 million on defence-related research and development. That is twisting and tilting the economy in terms of our expenditure in a fashion that I believe to be wrong and, in the long run, harmful to our economy.
I turn briefly to the way in which Governments deal with Select Committee reports. We have heard the


disparaging remarks made by Government Ministers about the report of a Select Committee of the House of Lords. I represent a constituency which has a large number of people employed in dockyards and I am wondering how Conservative Members will vote when the Bill which has been announced today is given a Second Reading.
Two Committees looked at the proposals relating to dockyards, the Public Accounts Committee and the Select Committee on Defence. They were not filled with Labour Back Benchers, of an extreme Left-wing persuasion or otherwise, but were dominated by Conservatives. Both Committees argued that the Government had failed to prove their case in relation to their objective of commercialisation for the dockyards. Did the Government halt? A wise and prudent manger, faced with this searching examination, would have cried, "Halt. I may have got it wrong", but not the Secretary of State for Defence. He goes on and imperils both industrial relations in the dockyards and the capability of those dockyards, which have served the Navy well for a long time.
These policies should be opposed by a prudent House of Commons willing to evaluate the arguments. The trouble with this Government, however, is that they are not persuaded by arguments. If I were to ask the Secretary of State why he is going ahead with this foolhardy policy on the dockyards, he would say that he is doing it from a doctrinaire approach. It is not something that he can prove in terms of savings, employment, service to the Navy or strategic importance. It is something that he considers desirable and so it has to be conceded and we must go on with it. I hope that Conservative Members will weigh these points about the dockyards extremely carefully.
Last night I switched on the television in time to hear the Prime Minister speaking at the Mansion house. From the way that she was dressed, I thought for a minute that we had Flora Robson in colour, but it was not so. She talked about jobs being important and about creating employment because it conferred a feeling of belonging. She accepts that argument, as would everyone in the House, but she does not accept the obverse.
The most important point about having some 3 million to 4 million unemployed is the feeling of alienation that it engenders. I ask Conservative Members to acknowledge that the cost of being unemployed is a feeling of not belonging, a feeling of alienation, of being apart. Neither this Government nor any other has the right to concentrate attention on tax cuts which will benefit the 85 per cent. in employment and forget the 15 per cent. who are alienated by unemployment.
If Conservative Members who have made so many critical speeches of the Government really examined our amendment, they would have the courage of their convictions and vote for it.

Mr. John Stokes: Hon. Members will recall last Wednesday's brilliant autumn weather when the Queen opened Parliament in such splendour. Shortly afterwards, in the debate, I noted that the hon. Member for Falkirk, West (Mr. Canavan), after making some fairly unpleasing remarks about having to go to the House of Lords to hear the Gracious Speech, said that we on the Government side of the House knew nothing of real people—people, he said, outside the House.

Immediately after the Gracious Speech, I went outside the House and joined the vast and friendly throng in the street. Just in front of me was a very rough-looking man. As the Queen passed in her coach, he gave out such a cheer that it almost burst my eardrums. That, I believe, was the voice of the real people in this country, which is so different from the figment of the hon. Gentleman's imagination. In spite of our differences, we must never forget the essential, underlying unity of this kingdom.
I welcome many of the proposals in the Gracious Speech. I am sorry that once again there appears to be too many Bills clogging our time and over-emphasising our law-making capacity, to the detriment of our duty to check the Executive and ensure as far as possible that the Government govern well and spend taxpayers' money wisely.
The Government have a difficult political choice in deciding whether to continue with their necessary reforms —such as more privatising, which which I thoroughly agree—or to rein back on some of those measures for fear of giving the public indigestion. The British people will be led but not driven.
In the main, the public still support the chief planks of the Government's programme, particularly on subjects such as law and order, defence and making the trade unions more democratic. However, the Government have proposed other measures—such as the new Sunday trading laws—which, I fear, may not be so popular.
There is great public concern about law and order following the appalling riots in our cities; and the public order legislation will be widely welcomed. The most vulnerable people in society—the old and infirm, children and young women—need the most protection. People expect severe sentences for all crimes of violence, such as assault, rape and mugging, as well as rioting, arson and throwing petrol bombs. They also expect the laws of England to be applied impartially to black, brown and white people. They expect the police to have all the necessary equipment to deal with riots.
In respect of all those matters, the nation is facing a moral crisis. Yesterday the Lord Chancellor said that this country was falling into moral decay and he warned that that could lead to anarchy and tyranny. There are also dreadful statistics for divorces, broken marriages and one-parent families.
I sometimes wish that the Government would give more of a moral lead. The protection of the family, for instance, is vital for the stability of society. I hope that the Government will come down firmly against embryo research.
In am not a fanatic about Sunday trading. We cannot make people good by Act of Parliament. In countries where churchgoing is greater than it is here—for example, in Scotland or France—there has been Sunday trading for many years. I realise also the anomalies in the present laws which should be put right.
Nevertheless, I do not want Sunday to be as any other day. There is enough irreligion now not to give it any further encouragement. Nor do I want the Government to appear money-grubbing and wholly commercial in their attitude to the matter. Unless the new laws are strictly limited in their effect, I shall not be able to support them. The Government should support churchgoing and certainly not do anything to make it more difficult. Also, I should be sorry to see a head-on clash with the churches on this issue.
I welcome the broadening of the powers of the building societies, setting them out in an appropriate framework. They will benefit from being able to offer more services and compete more equally with other retail institutions. Consumers will benefit from the wider range of services which they will be able to give.
I also welcome the laws proposed against the drug traffic and drug-taking, which is such an appalling menace to society and particularly to our young people.
This debate is mainly about industry and employment. As I represent a constituency in the west midlands, which used to be the heart of the nation's industrial effort, I have seen great decline and rising unemployment in the last few years. However, the picture is not as black as some Opposition Members have painted it. For instance, there is a vast improvement in labour relations, no doubt following the defeat of Scargillism last year. Industrialists and people on the shop floor in my area seldom complain. Few of them have alternative policies to suggest to those at present being pursued.
Unfortunately, the Government still give the impression of not being as interested in manufacturing industry as they should be. Many people believe that industry is not recruiting the best men and that salaries are woefully low compared with those paid in the City of London and the professions. The Government must take greater care to explain their policies more fully in words that ordinary people can easily understand. Too often, the Government lose their case by default. For instance, people believe that there have been cuts in public expenditure, when in some cases it has been increased.
The steady reduction in the inflation rate is widely welcomed in my constituency, especially among pensioners. Unemployment is levelling out and will probably go down. There is a welcome increase in job vacancies and new jobs being created. I welcome the vigour shown by my right hon. and noble Friend Lord Young in his new post and the new initiatives to deal with unemployment. I am especially pleased that the armed forces will do more training. They are probably the best trainers in the country.
The Queen's Speech does not mention immigration— a subject rarely debated in the House. We should be honest and realise that immigrants and the minority English communities in areas of high immigration wonder what the future will be for the next generation when immigrants will form perhaps one third of the total population. That serious matter must be considered now so that immigrants and English people can have confidence in their future.
The Gracious Speech sounded a confident note on foreign affairs. For the first time for many years there is a slight possibility that some form of arms control, if not disarmament, will be possible among the great powers.
On my visits abroad last year, I found that Britain and our Prime Minister were deeply respected. Our embassies do a splendid job in many capital cities and especially on the commercial side where great help is given to British business men. I hope that there will be no reduction in the Foreign Office Vote or in the overseas service of the BBC.
In general, I do not believe that the picture in Britain is anything like as black as it has been painted by the Opposition. People abroad still look up enormously to this country, to our form of government, our tolerance, our way of life, our traditions and to so much for which we should be thankful. We should remember that and count

our blessings. The Government must remain steady on their course. If they do so, they will deserve the support of all people of good will.

Mr. Stan Crowther: Listening to the statistics trotted out by the Secretary of State for Trade and Industry and the Chancellor of the Exchequer to prove that some great recovery is taking place, I was irresistibly reminded of the famous phrase quoted by a previous Conservative Prime Minister:
lies, damned lies and statistics.
I am sure that the Ministers were not telling lies, but they were manipulating statistics to prove the existence of a non-existent recovery.
I was pleased that my right hon. and learned Friend the Member for Monklands, East (Mr. Smith) emphasised the importance of the steel industry. Steelmaking is the best barometer of manufacturing industry. All manufacturers use steel—as a raw material, as machinery or as both. If, as the Government say, there is a marvellous recovery, why did a representative of the British Steel Corporation tell the Select Committee on Trade and Industry as recently as June—we were told this last year and the year before—that the corporation can foresee no increase in the demand for steel in Britain? That is why the corporation wishes to close more plants after those they have already announced. Tinsley park works in Sheffield will close in three weeks' time, causing hundreds more of my constituents to lose their jobs. If there is a recovery, why is there no foreseeable increase in the demand for steel? That simple question must be answered.
We are talking about the new high-productivity, slimline steel industry—an industry that has lost at least 120,000 jobs during the past five years, an industry in which all the alleged overmanning has been ruthlessly cut out and in which all the so-called excess capacity has already been closed. The corporation is saying that, despite the high productivity and the fact that the industry has become competitive, there will be no increase in demand. Do Ministers know what they are talking about? Do they know what is happening in British industry? Only a couple of weeks ago at Question Time, the Minister of State assured me that rumours about closures and redundancies in my constituency were "pure speculation". However, while he was telling me that, the BSC was busily announcing another substantial batch of redundancies at the Rotherham works. It is his job to know what is happening and my job to try to find out, but he certainly did not know that. Do Ministers really believe what they are telling us about a recovery? They should visit south Yorkshire to see the devastation for themselves. Let them visit the industrial wastelands, the desolate empty factories, the shut-down mills and melting shops in what used to be the biggest centre of steelmaking and heavy engineering in the world. It is heart-breaking to see that.
I wish that Ministers would explain to my constituents, who are being made redundant in their hundreds every month, why they are losing their jobs when we are having such a marvellous recovery. They are entitled to such an explanation. I wish they would explain to the youngsters leaving school this year why they have no hope of obtaining proper jobs.
Several hon. Members have mentioned small businesses, whose development I strongly support. I was involved in that area before I entered the House. But it


would take many small businesses to create the 20,000 jobs that we need in Rotherham today, not in five or 10 years' time—[Interruption.] Ministers should do something about it instead of sitting on the Front Bench laughing and chortling. It is a serious matter in my constituency.
The overriding need today is to get our wealth-creating manufacturing industry back on its feet in our great industrial regions. Those areas created the foundations of our national prosperity and, given half a chance, they would do so again.

Mr. John Prescott: I apologise to hon. Members if I was not here for part of the debate, although I have attended the greater part of it.
The debate has reflected what is apparently the new tone in the unemployment debate—public expenditure is now "in". After the Prime Minister's speech last night, it appears that public expenditure can create jobs and is actually planned to achieve that objective. A good example of that principle was revealed in the Paymaster General's speech, which presented a number of proposals specifically designed to reduce the level of unemployment and to provide more employment measures although they are not what the Opposition would call real jobs.
Following the exchanges in the House earlier this evening, I examined the autumn statement, which I see claims:
from the employment measures, the trend in unemployment should continue to be more favourable than over the last two years.
As I suggested earlier, the autumn statement says that 100,000 on community schemes and possibly 100,000 on YTS will reduce unemployment by perhaps 250,000. That is a fiddling of the figures to show that, by election time, the unemployment figures have gone down.
I welcome, and will not knock, the fact that the Government are convinced that more public expenditure can reduce unemployment. That is the heart of the argument and the alternative put forward by the Opposition. Hon. Members have tonight proposed several choices which the Government could pursue to create more employment. Both sides of the House have agreed that, while we may be critical of relying on tourism to provide jobs—I welcome jobs wherever they come from —we should not encourage tourism at the expense of our manufacturing base, which continues to decline.
It is not satisfactory for Ministers to talk about record levels of investment when it is the level of investment in manufacturing that is important. The important area is that of manufacture and the creation of wealth. A study of investment in manufacturing reveals that there is a long way to go before either output or investment figures reach the 1979 level. The Secretary of State for Trade and Industry should be made aware of that and I address his attention to it.
The right hon. Member for Chesham and Amersham (Sir I. Gilmour) made a sound and important point about growth. We cannot continue to rely on growth alone to create full employment. In the past two decades, each increase in growth has produced fewer and fewer jobs. Growth now has a negative effect upon jobs. We simply

cannot rely on growth to provide full employment. A mixture of public and private investment is crucial if the Government want to reduce unemployment.
I welcome the Paymaster General to his first debate on employment in his new capacity, but I strongly deplore the fact that the Secretary of State for Employment should be in another place—[Interruption.] are hon. Members telling me that he is observing?—particularly as he is the architect of most of the current policies, which involve low pay, part-time work, and an awful lot of low-quality training in manpower schemes. The Secretary of State for Employment is more responsible for Government policy than the Paymaster General and he should answer for the Government.

Mr. Baldry: rose—

Mr. Prescott: I have not time to give way.
I hope that the Secretary of State will not lecture us about democracy in the trade unions. Before he does that he should seek election himself, be elected and come to the House.
Nevertheless, I welcome the Paymaster General, who has, in all his jobs so far, been the best man rather than the groom. I believe that he is concerned about facts and about the argument. As the debate about unemployment is about to take place, will he agree the basic common facts so that the debate may be about truth and the facts rather than a contest on the issue? That has often been the case in the House and elsewhere, when the monthly unemployment figures are announced.
I have been to the Library to discover the real level of unemployment. We know that 3·27 million people are registered as unemployed, but that is the Government's first fiddle. On the basis of the Labour Government's criteria, about 3·6 million people would be registered as unemployed. I am sure that we can agree on the figures produced by the Library calculated on the basis of the labour force survey. If we add to the total the number of unemployed males aged 60 to 64, the number of unemployed non-claimants, those who have temporarily stopped work and the effects of special employment and training schemes, the total comes to 4·75 million looking for work. If we add to that figure the 250,000 that the Minister is fiddling today, unemployment stands at 5 million on the basis of the Government's own figures and the labour force survey. I do not want to argue about that —[Interruption.] Provided that we can accept the Library's figures, based on the labour force survey, unemployment runs at 4·75 million. I am quite prepared to accept 3 million, which is higher than we had in the 1930s. At least we can agree on the number of people looking for work on the Department's figures.

Mr. David Maclean: Will the hon. Gentleman give way?

Mr. Prescott: I cannot—I do not have the time.
I hope that the Paymaster General also agrees that unemployment in Britain has been higher than in Europe. The OECD figures show that. If I had the time, I could refer to the relevant tables. Britain's unemployment average has always been the average of European OECD countries—until 1979. As for the percentage increase in unemployment in Britain, the Library, using OECD figures says:
Had the United Kingdom unemployment rate worsened at the same rate as the OECD average, the current unemployment rate would be approximately 1 million lower than it actually is.


Can we agree, therefore, that our unemployment is higher than in our competitor countries in Europe? The evidence is clear.
Previous Secretaries of State have often said that our working population represents a larger proportion of the total than in the rest of Europe. It has always been so. Since 1979, however, that proportion has fallen more than the average in Europe. It is therefore not correct for the Government to claim that they have been successful. Indeed, the deterioration has been accelerated by the Government's policies.
The Opposition argue that most of the changes have been brought about by the Government's policies. An OECD report compares the public expenditure pattern in Britain with that in European OECD countries. The cuts in transport, hospitals and roads have been much deeper here than in Europe. That is given as one reason why unemployment here is higher. We should agree, therefore, that Government policy has reduced inflation and consequently thrown many more people out of work. For every 1 per cent. fall in inflation, three quarters of a million people have been thrown on the dole. The price of the Government's anti-inflation policy has been mass unemployment.
The charge against the Government is that they have deliberately brought about mass unemployment by choosing to pursue monetary economic policies. Unemployment is therefore higher than elsewhere, it results from Government policy and it is a deliberate part of policy.
A committee of experts in the International Labour Organisation has produced a white paper calling on all ILO countries to agree that full employment must be a major aspect of Government policy. The Government are refusing to ratify that recommendation. The committee of experts has examined the Government's policy and it says:
the Committee … is bound to stress that, even in an economic strategy which regards (stable prices and competitiveness) as the ultimate aim, an active employment policy must, in the terms of the Convention … be pursued as a major goal.
The experts said:
the Government's present policy had not been able to give satisfactory results in this respect; the Conference considered that it was the Government which had the primary responsibility in this area".
Even the experts from other countries who have examined Britain's economic policy have agreed that mass unemployment has arisen directly from the Government's policy and their consequent decisions, for whatever reason. It is directly induced mass unemployment, which begs the question whether the Government deliberately intend to achieve that end.
If the committee of experts in the ILO was looking for comfort from the Queen's Speech, all it can see is further notice that the Government intend to abrogate their international obligations and conventions. They see the abrogating of the Truck Acts and wages council legislation. Britain is the only country among 92 to seek to solve its unemployment by attacking the low paid in wages council industries. That is the reality of the Queen's Speech and what the Government are now saying is the solution to unemployment.
When we look at the Truck Acts and the reform of the wages councils, which will be opposed bitterly by the Opposition, we need to understand precisely what the Government are about to do, and why. We must begin to understand the relevance of mass unemployment from

their point of view and the way that they are out to discipline the labour market and workers, particularly in low-paid jobs.
By abolishing the Truck Acts and reforming the wages councils, the Government are introducing a 19th-century solution. They are returning to Victorian values, to the sweated industries of Britain in the 19th century. They wish to remove current protections and reintroduce the 1880s to the 1980s. I can justify that assertion by analysing some of the proposed changes. What do the Government intend to do by reforming the Truck Acts and abrogating our international obligations? They apparently desire to make sure that everybody can be paid by cheque instead of cash. If that is to be the case, it removes choice from the individual.
The Government are always talking about choice and the individual, but he will no longer be able to exercise his preference to be paid in cash rather than by cheque. The individual will now have to pay £40 or £60 a year in bank charges, which is a large sum for someone who is not earning much money each week. [Laughter.] Conservative Members laugh, but that is the reality. There is also the problem that bank opening times are not convenient for many workers.
Why should the individual not have the right to choose whether he is paid in cash or by cheque? The Conservative party lectures us about individuals and their rights but Britain is the only country to take this course. Britain is also the only country to remove protection from the employee for deductions. What will that mean? Does it mean that the employer will have the right—unless it is written into the contract that he does not —to make deductions for disciplinary offences, tool charges, light and heat? That is what used to happen in the 19th century. By removing these controls one invites the employer, who already feels he has the whip hand, to impose adverse conditions on workers.
What is threatened by the reform of the wages councils? The Government are threatening to remove protection for young people under 21. That will affect half a million of our youngsters who are on low wages, such as my son, who was an apprentice hairdresser. He was receiving only £23 a week. It would have affected me in the days when I was commis chef and worked under wages council regulations. I know the conditions of wages councils because I had to live under them. Not many Conservative Members could tell us about that.

Mr. Warren: I could.

Mr. Prescott: The hon. Gentleman will probably agree with what I am going to say, and I hope that he will vote against the Government's proposals for wages councils. If we remove the young people from their protection and fix a single rate of pay, nothing will be done for holiday provision—indeed, holiday protection will be reduced. Nothing will be done about the rate differentials, so there will be a single rate.
All these conditions are currently protected by the wages councils. The Government's proposals seem to be designed to make conditions even more deplorable and to shift the balance even more in favour of the employer at the place of work. This will happen in areas where workers are at their weakest. We have an obligation under the ILO to ensure that workers who are in the weakest position are not subjected to the sort of legislation that the Government propose.
The Minister talks about the reform of the wages councils and I predict that the Government intend to channel our youngsters into wages council industries. That will enable them to ease the rate of unemployment among those who have completed YTS courses. I understand that about 50 per cent. of those who leave the courses are unable to obtain jobs. The Government intend that they should skivvy in kitchens, wait in hotels or work in shops. That sort of job is being set up for our youngsters. [HON. MEMBERS: "Disgraceful."] Perhaps I should tell Conservative Members that the right hon. member for Waveney (Mr. Prior) made a similar statement in a Cabinet paper in 1981 when he was Secretary of State for Employment. I am only repeating the words of the right hon. Gentleman.
The Government plan to replace the women who are working in kitchens, hotels and shops for £50 or £60 a week with youngsters who have completed YTS schemes. Their intention is to pay them about £40 a week. That will reduce unemployment because many women work part time and cannot register as unemployed. Secondly, it will take more youngsters off YTS schemes. Youngsters will undertake the work that is currently performed by women but at lower rates of pay and this will produce an overall downward shift in wage levels. The Opposition believe that that is the Government's aim. They wish to reduce the wage levels of the lowest paid.
Where is the evidence that lower rates of pay produce more employment opportunities? The Government have often made that claim but the evidence that is available seems to refute it. Over the past five years, wages have fallen the most in areas of employment that are low paid. The gap between the low-paid and the highest paid has grown considerably over that period. At the same time, unemployment has increased faster among the low-paid.
We know that the Government have examined wage levels in the clothing industry. The evidence produced by the Department of Employment, which reflected the position of garment workers, was examined by the Cambridge department of applied economics, which claimed that the Department had used incorrect figures. It stated that some of the Department's key assumptions were false and that its analysis was inadequate. It stated that, if the Department had used the correct figures, its study would have revealed that
the rise in male minimum rates produced a small fall in employment, while the larger rise in female minimum rates increased employment by a greater percentage.
The Government produced a fiddled piece of research, like their fiddled unemployment figures.
The fiddle does not end there. The Chancellor of the Exchequer said, as did the right hon. and learned Member for Rushcliffe (Mr. Clarke) when he was appointed Paymaster General, that a 1 per cent. fall in wages would lead to 150,000 more jobs. Where is the evidence for that? That controversial claim was analysed by Warwick university's economic model group and it found that the increase in jobs would be about 15,000 instead of 150,000. It found that outcome difficult to understand, so it examined the model further. It concluded:
The estimates that we obtain reveal a much smaller employment response than that predicted by the Chancellor.
I suppose that 15,000 is much less than 150,000. It continued:

Part of this difference is attributable to revisions in the Treasury model".
Even the Treasury model was got at to produce the figure of 150,000. It is clear that there are fiddles in every figure that the Government produce. We know that that is so but —[Interruption.] Conservative Members may choose to shout, but I do not hear any substantial rejection of the Warwick study.
The Government's real purpose is to strengthen the power of the employer at the place of work, to attack those on low incomes and to encourage employers not to pay basic wages.
The Silentnight dispute had been going on for 20 weeks when the Under-Secretary of State for Employment made a deplorable speech in the House; it was even attacked by the Lancashire Evening Telegraph—a Tory paper—on the grounds that the Minister had sided with the employer. I ask the Paymaster General in all seriousness to get the papers from ACAS and look at them, because there is a role for Government in arbitration in these matters.
The Government's whole policy is designed to reduce low wage rates and to attack the lowest paid by removing protections from them. That is what the Queen's Speech is about. As for the Government's promised 600,000 jobs, 400,000 of those jobs are part-time. The Secretary of State talks about the European analysis. In this country, full-time jobs are being replaced by part-time jobs at a rate unparalleled anywhere else in Europe. The Government have embarked on a part-time low-paid economy. I have analysed the figures for the increase in full-time job equivalents of which the Secretary of State talks. It will take him 70 years to get back to the level of employment that he inherited from the Labour Government in 1979.
Let there be no mistake: we know what the Government are doing. Unemployment in this country is higher and deeper than it is anywhere else. It is deliberate Government policy to impose burdens on those least able to bear them. We shall do everything that we can to oppose that policy in the coming Session.

The Paymaster General (Mr. Kenneth Clarke): I begin by noting a remarkable event which took place in today's debate. The right hon. Member for Bristol, South (Mr. Cocks) broke 11 years of silence to intervene in the debate. I was elected at the same time as the right hon. Gentleman, although I have not as yet had the pleasure of listening to him often. I congratulate the right hon. Gentleman and assure him that the Elders IXL takeover bid for Allied-Lyons is currently being examined by Ministers and the points that he made will be carefully considered.
The hon. Member for Kingston upon Hull, East (Mr. Prescott) wound up for the Opposition. Before plunging into the general, I will deal with one particular. I have taken on board his point about the Silentnight dispute and will look into it. As he knows, both parties to that dispute have the right of access to ACAS and I believe that ACAS officials have already been involved. I will consider what the hon. Gentleman has said. Clearly, everyone wishes the dispute to be resolved to the satisfaction of the firm and its employees.
With regard to the Gracious Speech, the hon. Member for Kingston upon Hull, East touched on the one measure that will concern us both most particularly in this Session when he attacked our proposals—in the opinion of


many they are fairly modest proposals—to reform the wages councils and repeal the Truck Acts. I was amazed at the vehemence of the hon. Gentleman's opposition to those proposals. He talked about a return to Victorian values but I have never heard a more passionate and conservative—with a small "c"—defence of Edwardian England than the hon. Gentleman's comments.
That legislation was designed for entirely different economic and social conditions albeit by a good reforming Government—the Asquith Government of 1908. With regard to wage levels, both measures applied to conditions well before the modern welfare state and to a time when sweated labour conditions were more universal and a greater fear than they are today. We must consider the modern implications of retaining old legislation in all its details.
My credulity was strained to the limit by the hon. Gentleman's passionate defence of the Truck Acts and his root and branch opposition to the idea of payment by cheque in England in 1985 as a dangerous innovation. That appears to be based on his belief that someone without a bank account cannot cash a cheque. When the legislation comes forward, we can explain that to him and perhaps eliminate an argument about inhibiting personal choice.
We shall obviously address ourselves to the arguments about wages councils when the legislation is reached, but the number of wages councils have over the years been steadily reduced by successive Governments. The ones that remain raise the wages bill of some employers and reduce their competitiveness in the market. As the hon. Gentleman will know, many employers within the wages councils trades are to a large extent not affected directly on most issues, as many of them pay well above wages councils rates.
The main effects that we are seeking to reform are those resulting from the fact that some wages councils raise fringe benefits over and beyond basic rates and overtime rates and particularly from the artificial raising of the wages of younger employees. In our opinion, that sometimes raises the cost of employing younger people above the value that they can add to the business of a prospective employer, and that costs jobs.

Mr. Ashdown: rose—

Mr. Clarke: I have only a short time left. I know that the hon. Gentleman was unlucky and was not called, but I have no time to give way to him.
Within the wages councils trades, the rates of pay for younger workers in relation to rates of pay for adult workers are higher than is the norm in this country—much higher than the norm in some other equivalent economies abroad—which is why we are directing ourselves to the reforms that we have in hand.
Most of the debate was devoted to the wider issues of industry and employment. The background to the debate —which I have no time to repeat, and which I do not think I need repeat after the statement by the Chancellor, the speech of my right hon. and learned Friend the Secretary of State for Trade and Industry and my own statement—is that in what I hope is not an over-exciting way the Government are presenting encouraging economic news. We have encouraging employment figures. A number of new jobs are being created, and the number of vacancies now being notified to jobcentres is, as always, only a proportion of the total number of vacancies in the

economy. The package of measures that I announced earlier today will, I hope, give more encouragement to all those involved in the vital search for jobs which concerns so many of the long-term unemployed.
Like my hon. Friend the Member for Staffordshire, Moorlands (Mr. Knox), I still reach the conclusion that employment and unemployment remain the key political and social issues. I believe that what the Government have presented today is a substantial step towards relieving that social problem.
The hon. Member for Kingston upon Hull, East revealed that for obvious reasons his major concern, and that of many of his hon. Friends, is to minimise the exent of the improvement and, if it were possible, to make the problem of unemployment even worse. I was disappointed when he began with the enticing appeal, "Let us agree on the facts and let us get down to a sensible argument chat helps the country." He then raced into his usual diatribe about fiddled figures. He held up a list of figures from the Library, which I suspect were right, but his interpretation of them led him on to the ever-mounting heights of 4 million to 5 million total unemployed.
We have the total of registered unemployed which the hon. Gentleman accurately quoted. That total is inflated by the hon. Gentleman and his vehement colleagues by adding the 870,000 not receiving benefit but who are seeking work. But they take no account of the 940,000 revealed by the recent labour survey who are receiving benefit but not actively looking for work. These figures are incontrovertible, but only by adding them together does one produce the figures complained about.
Even worse, the hon. Gentleman adds to his total of unemployed those on the youth training scheme when he purports to be in favour of people being encouraged to go into good quality training and in favour of the objects of the scheme. Now that training is becoming a permanent part of the preparation for work, there is no reason at all why trainees, any more than sixth formers, people in further education or others involved directly in preparation for work, should be counted as unemployed.
There is no reason blithely to take those who are working on the community programme, or who are engaged upon special measures and taking part in paid work which will improve their employment prospects, and add them to the total of those who are unwillingly idle.
It is relevant to point out that no previous Government have added those who are engaged on special measures to the unemployment figures. They are people with jobs. They are getting work experience and they are being paid for it. There is clear agreement on the figures. I cannot see the slightest point in endeavouring to add every footnote that can be found and to define people as unemployed when plainly they are not. The Government are prepared to accept that it is their duty to create conditions in which more jobs can be generated and the true figure of unemployment reduced.
The hon. Member for Kingston upon Hull, East passed up the opportunity—which was seized, rather recklessly and wildly, by his right hon. Friend the Member for Chesterfield (Mr. Benn)—to try to explain what the Opposition's response would be if they were returned to Government. The occasion of this debate upon the Gracious Speech would have been a suitable occasion to do so. They cue was given by my right hon. and learned Friend the Secretary of State for Trade and Industry. He said that on his recent visit to America one of the major


fears that was expressed by prospective investors in this country was the possibility of the return to power of a Labour Government.

Mr. Prescott: That is not true.

Mr. Clarke: If that is not true, the hon. Gentleman should have done something to allay those fears. Outside this House he as taken the opportunity to present his proposals. They are set out in a Labour party document of which he is the author. He has done so as the Opposition Front Bench spokesman on this subject. Its title is "Planning for Full Employment". I very much doubt whether the policies contained in "Planning for Full Employment" would hold very much attraction for prospective inward investors into this country. In the preface to the document the hon. Gentleman baldly states:
Only by a planned interventionist policy, working towards socialist objectives, can we hope to achieve a fundamental redistribution of power, wealth and jobs.
No doubt the hon. Gentleman believes, together with his right hon. Friend the Member for Chesterfield, that when he tried a Socialist solution it was the treaty of Rome which prevented Mr. Mitterrand from achieving a redistribution of power and creating jobs.
How will "Planning for Full Employment" or, to take the syntax literally, the redistribution of jobs, be carried out? First, the hon. Gentleman advocates, presumably as the official policy of the Opposition, more nationalisation. He says:
Expansion of the public sector and its ownership is crucial in making industry more accountable.
Has he discussed that with his right hon. Friend the Member for Birmingham, Sparkbrook (Mr. Hattersley) who seems to express a different opinion on certain occasions? And would he discuss it with the right hon. Member for Glasgow, Hillhead (Mr. Jenkins), who on previous occasions seemed to have difficulty in deciding how to vote on these issues? There will also be an extension of trade union control over industry.

Mr. Prescott: The right hon. and learned Gentleman is referring to just little bits of the document.

Mr. Clarke: I had trouble like this when the hon. Member for Oldham, West (Mr. Meacher) spoke about social services. When a document is produced by a Front Bench spokesman for the Labour party, I expect him to believe, as the author of that document, in what he says. The hon. Gentleman advocates:
Labour's industrial democracy policy should give workers greater control over their own activity by extending collective bargaining from purely general issues and as images into the management and organisation of production".
The relationship between wages and jobs is entirely missed out. The repeal of all the Government's anti-trade union legislation is described in and promised by this document. A workers' rights Act is proposed. The document refers to almost everything except giving workers the right to ballot or any voice in the activities of their union. The hon. Member for Kingston upon Hull, East, in his diatribes about our policies and our encouraging progress, was putting forward policies that would not only frighten the pants off American or other overseas investors but drive up the unemployment level in Britain as the Labour party sought to extend greater control over the economy.
Despite the fact that the hon. Member for Yeovil (Mr. Ashdown) was not lucky enough to catch your eye, Mr.

Speaker, there were contributions from the alliance, especially the right hon. Member for Hillhead. He had the opportunity to set out his reaction to the policies of the Government whom we are defending. His extraordinary speech came to no particular conclusion after his sudden confession that, for 10 years as a Labour party member, he had been a disillusioned supporter of nationalisation. He seemed surprised when we reminded him that he had voted repeatedly for it during that time. I recall that the Bill to nationalise shipbuilding was carried by one vote. Presumably it was carried by the right hon. Member for Hillhead who did not believe in what he was voting for. That puts him in a difficult position on the privatisation proposals in the Gracious Speech.
What is the position of the right hon. Member for Hillhead and, presumably, his colleagues? Now that principle has returned and they are solemnly in the centre of British politics and know what they are doing, which way will they vote? The right hon. Gentleman does not know. He said that he was going to wait for the Bill. I have never heard a greater compliment paid to the draftsmen of parliamentary documents. The policy appears reasonably clear to me. Its merits and demerits have been argued. The right hon. Member for Hillhead has gone into the opportunism of third-party politics and has made a confession of a somewhat discreditable past.
The main issue in the debate has been the balance between services and manufacturing. We have been pressed most cogently on that point by my hon. Friends the Members for Devizes (Mr. Morrison), for Bury, North (Mr. Burt), for Moorlands and for Halesowen and Stourbridge (Mr. Stokes) and by my right hon. Friend the Member for Chesham and Amersham (Sir I. Gilmour). I should make our position clear. In answering the House of Lords Select Committee, no Government Member is in any way seeking to dismiss or denigrate the contribution of manufacturing industry.
I do not understand how anyone can conjure anything that has been said to deny the value to an economy of a strong and competitive manufacturing industry. The shift between the proportion of people employed in service industries and the proportion of people employed in manufacturing has been a continuing trend in Britain for many years, as it has been in every equivalent developed economy. It is plainly likely to happen for a variety of reasons. It is worth pointing out, before people get shattered about our position that in 1983 manufacturing output as a proportion of GDP was exactly the same in Britain as in the United States. That is a comparison not with the state of New York, which is an extreme example, but with the whole of the United States, which is the wealthiest economy in the western world. The proportion of services as a percentage of GDP provided in the United States is as great as that provided here. The proportion of people employed in service industries in the United States is higher than the proportion employed in Britain.
When we attack the Select Committee's report, we are not dismissing the difficulties of manufacturing industry. However, the evidence chosen by that Committee was highly selective. Since the trough of the recession, manufacturing output has increased by 11 per cent., manufacturing investment by 39 per cent. and manufacturing productivity by 31 per cent. and the value of manufacturing exports is at record levels. The House of Lords Select Committee proposed solutions which no one had really supported—subsidies for manufacturing


industry, an inside track, preferential treatment for taxation and grants, compared with services. Those authors would say that. We believe that manufacturing and the rest of the economy—

Question put, That the amendment be made:—

The House divided: Ayes 218, Noes 354.

Division No.2]
[10 pm


AYES


Abse, Leo
Evans, John (St. Helens N)


Adams, Allen (Paisley N)
Ewing, Harry


Alton, David
Fatchett, Derek


Archer, Rt Hon Peter
Faulds, Andrew


Ashdown, Paddy
Field, Frank (Birkenhead)


Ashley, Rt Hon Jack
Fields, T. (L'pool Broad Gn)


Ashton, Joe
Fisher, Mark


Atkinson, N. (Tottenham)
Flannery, Martin


Bagier, Gordon A. T.
Foot, Rt Hon Michael


Banks, Tony (Newham NW)
Forrester, John


Barnett, Guy
Forsythe, Clifford (S Antrim)


Barron, Kevin
Foster, Derek


Beckett, Mrs Margaret
Foulkes, George


Beggs, Roy
Fraser, J. (Norwood)


Beith, A. J.
Freeson, Rt Hon Reginald


Bell, Stuart
Freud, Clement


Benn, Tony
Garrett, W. E.


Bennett, A. (Dent'n &amp; Red'sh)
George, Bruce


Bermingham, Gerald
Gilbert, Rt Hon Dr John


Bidwell, Sydney
Godman, Dr Norman


Blair, Anthony
Gould, Bryan


Boothroyd, Miss Betty
Gourlay, Harry


Boyes, Roland
Hamilton, James (M'well N)


Bray, Dr Jeremy
Hamilton, W. W. (Central Fife)


Brown, Gordon (D'f'mline E)
Hancock, Mr. Michael


Brown, Hugh D. (Provan)
Harman, Ms Harriet


Brown, N. (N'c'tle-u-Tyne E)
Harrison, Rt Hon Walter


Brown, R. (N'c'tle-u-Tyne N)
Healey, Rt Hon Denis


Bruce, Malcolm
Heffer, Eric S.


Buchan, Norman
Hogg, N. (C'nauld &amp; Kilsyth)


Caborn, Richard
Howell, Rt Hon D. (S'heath)


Callaghan, Rt Hon J.
Howells, Geraint


Callaghan, Jim (Heyw'd &amp; M)
Hoyle, Douglas


Campbell-Savours, Dale
Hughes, Dr. Mark (Durham)


Canavan, Dennis
Hughes, Robert (Aberdeen N)


Carter-Jones, Lewis
Hughes, Roy (Newport East)


Cartwright, John
Hughes, Sean (Knowsley S)


Clark, Dr David (S Shields)
Hughes, Simon (Southwark)


Clarke, Thomas
Janner, Hon Greville


Clay, Robert
Jenkins, Rt Hon Roy (Hillh'd)


Clwyd, Mrs Ann
John, Brynmor


Cocks, Rt Hon M. (Bristol S.)
Johnston, Sir Russell


Cohen, Harry
Jones, Barry (Alyn &amp; Deeside)


Coleman, Donald
Kaufman, Rt Hon Gerald


Conlan, Bernard
Kennedy, Charles


Cook, Frank (Stockton North)
Kilroy-Silk, Robert


Cook, Robin F. (Livingston)
Kinnock, Rt Hon Neil


Corbett, Robin
Kirkwood, Archy


Corbyn, Jeremy
Lambie, David


Cox, Thomas (Tooting)
Lamond, James


Craigen, J. M.
Leadbitter, Ted


Crowther, Stan
Leighton, Ronald


Cunliffe, Lawrence
Lewis, Ron (Carlisle)


Cunningham, Dr John
Lewis, Terence (Worsley)


Dalyell, Tam
Litherland, Robert


Davies, Rt Hon Denzil (L'lli)
Livsey, Richard


Davies, Ronald (Caerphilly)
Lofthouse, Geoffrey


Davis, Terry (B'ham, H'ge H'I)
Loyden, Edward


Dewar, Donald
McCartney, Hugh


Dixon, Donald
McCusker, Harold


Dobson, Frank
McDonald, Dr Oonagh


Dormand, Jack
McGuire, Michael


Douglas, Dick
McKay, Allen (Penistone)


Dubs, Alfred
McKelvey, William


Duffy, A. E. P.
MacKenzie, Rt Hon Gregor


Dunwoody, Hon Mrs G.
Maclennan, Robert


Eadie, Alex
McNamara, Kevin


Eastham, Ken
McTaggart, Robert


Edwards, Bob (W'h'mpt'n SE)
Madden, Max


Ellis, Raymond
Maginnis, Ken





Marek, Dr John
Sheerman, Barry


Marshall, David (Shettleston)
Sheldon, Rt Hon R.


Martin, Michael
Shore, Rt Hon Peter


Maxton, John
Short, Ms Clare (Ladywood)


Maynard, Miss Joan
Silkin, Rt Hon J.


Meacher, Michael
Skinner, Dennis


Meadowcroft, Michael
Smith, C.(Isl'ton S &amp; F'bury)


Michie, William
Smith, Rt Hon J. (M'kl'ds E)


Mikardo, Ian
Smyth, Rev W. M. (Belfast S)


Millan, Rt Hon Bruce
Snape, Peter


Miller, Dr M. S. (E Kilbride)
Soley, Clive


Morris, Rt Hon A. (W'shawe)
Spearing, Nigel


Morris, Rt Hon J. (Aberavon)
Stewart, Rt Hon D. (W Isles)


Nicholson, J.
Stott, Roger


Oakes, Rt Hon Gordon
Strang, Gavin


O'Brien, William
Straw, Jack


O'Neill, Martin
Taylor, Rt Hon John David


Park, George
Thomas, Dafydd (Merioneth)


Parry, Robert
Thomas, Dr R. (Carmarthen)


Patchett, Terry
Thompson, J. (Wansbeck)


Pavitt, Laurie
Thorne, Stan (Preston)


Pendry, Tom
Tinn, James


Penhaligon, David
Torney, Tom


Pike, Peter
Wainwright, R.


Powell, Rt Hon J. E. (S Down)
Walker, Cecil (Belfast N)


Powell, Raymond (Ogmore)
Wallace, James


Prescott, John
Wardell, Gareth (Gower)


Radice, Giles
Wareing, Robert


Randall, Stuart
Weetch, Ken


Rees, Rt Hon M. (Leeds S)
Welsh, Michael


Richardson, Ms Jo
White, James


Roberts, Allan (Bootle)
Wigley, Dafydd


Roberts, Ernest (Hackney N)
Williams, Rt Hon A.


Robinson, G. (Coventry NW)
Wilson, Gordon


Rogers, Allan
Winnick, David


Rooker, J. W.
Woodall, Alec


Ross, Ernest (Dundee W)
Wrigglesworth, Ian


Ross, Stephen (Isle of Wight)



Ross, Wm. (Londonderry)
Tellers for the Ayes:


Rowlands, Ted
Mr. John McWilliam and


Ryman, John
Mr. Frank Haynes.




NOES


Adley, Robert
Brown, M. (Brigg &amp; CI'thpes)


Aitken, Jonathan
Browne, John


Alexander, Richard
Bruinvels, Peter


Alison, Rt Hon Michael
Bryan, Sir Paul


Amery, Rt Hon Julian
Buchanan-Smith, Rt Hon A.


Amess, David
Buck, Sir Antony


Ancram, Michael
Budgen, Nick


Arnold, Tom
Bulmer, Esmond


Ashby, David
Burt, Alistair


Aspinwall, Jack
Butcher, John


Atkins, Rt Hon Sir H.
Butler, Hon Adam


Atkinson, David (B'm'th E)
Butterfill, John


Baker, Rt Hon K. (Mole Vall'y)
Carlisle, John (Luton N)


Baldry, Tony
Carlisle, Kenneth (Lincoln)


Banks, Robert (Harrogate)
Carttiss, Michael


Batiste, Spencer
Cash, William


Beaumont-Dark, Anthony
Chalker, Mrs Lynda


Bellingham, Henry
Channon, Rt Hon Paul


Bendall, Vivian
Chapman, Sydney


Benyon, William
Chope, Christopher


Best, Keith
Churchill, W. S.


Bevan, David Gilroy
Clark, Hon A. (Plym'th S'n)


Biffen, Rt Hon John
Clark, Dr Michael (Rochford)


Blackburn, John
Clark, Sir W. (Croydon S)


Blaker, Rt Hon Sir Peter
Clarke, Rt Hon K. (Rushcliffe)


Body, Richard
Clegg, Sir Walter


Bonsor, Sir Nicholas
Cockeram, Eric


Bottomley, Peter
Colvin, Michael


Bottomley, Mrs Virginia
Conway, Derek


Bowden, A. (Brighton K'to'n)
Coombs, Simon


Bowden, Gerald (Dulwich)
Cope, John


Boyson, Dr Rhodes
Cormack, Patrick


Braine, Rt Hon Sir Bernard
Corrie, John


Brandon-Bravo, Martin
Couchman, James


Brinton, Tim
Cranborne, Viscount


Brittan, Rt Hon Leon
Critchley, Julian


Brooke, Hon Peter
Crouch, David






Currie, Mrs Edwina
Holland, Sir Philip (Gedling)


Dickens, Geoffrey
Holt, Richard


Dicks, Terry
Hordern, Sir Peter


Dorrell, Stephen
Howard, Michael


Douglas-Hamilton, Lord J.
Howarth, Alan (Stratf'd-on-A)


Dover, Den
Howarth, Gerald (Cannock)


du Cann, Rt Hon Sir Edward
Howell, Rt Hon D. (G'ldford)


Dunn, Robert
Hubbard-Miles, Peter


Durant, Tony
Hunt, David (Wirral)


Dykes, Hugh
Hunter, Andrew


Eggar, Tim
Irving, Charles


Emery, Sir Peter
Jackson, Robert


Evennett, David
Jenkin, Rt Hon Patrick


Eyre, Sir Reginald
Jessel, Toby


Fairbairn, Nicholas
Johnson Smith, Sir Geoffrey


Fallon, Michael
Jones, Gwilym (Cardiff N)


Farr, Sir John
Jones, Robert (Herts W)


Favell, Anthony
Joseph, Rt Hon Sir Keith


Finsberg, Sir Geoffrey
Kellett-Bowman, Mrs Elaine


Fletcher, Alexander
Kershaw, Sir Anthony


Fookes, Miss Janet
Key, Robert


Forman, Nigel
King, Roger (B'ham N'field)


Forsyth, Michael (Stirling)
Knight, Greg (Derby N)


Forth, Eric
Knight, Dame Jill (Edgbaston)


Fowler, Rt Hon Norman
Knowles, Michael


Fox, Marcus
Knox, David


Franks, Cecil
Lamont, Norman


Fraser, Peter (Angus East)
Lang, Ian


Freeman, Roger
Latham, Michael


Fry, Peter
Lawler, Geoffrey


Gale, Roger
Lawrence, Ivan


Galley, Roy
Lawson, Rt Hon Nigel


Gardiner, George (Reigate)
Leigh, Edward (Gainsbor'gh)


Gardner, Sir Edward (Fylde)
Lennox-Boyd, Hon Mark


Garel-Jones, Tristan
Lester, Jim


Gilmour, Rt Hon Sir Ian
Lewis, Sir Kenneth (Stamf'd)


Glyn, Dr Alan
Lightbown, David


Goodhart, Sir Philip
Lilley, Peter


Goodlad, Alastair
Lloyd, Ian (Havant)


Gorst, John
Lloyd, Peter, (Fareham)


Gow, Ian
Lord, Michael


Gower, Sir Raymond
Luce, Richard


Greenway, Harry
Lyell, Nicholas


Gregory, Conal
McCrindle, Robert


Griffiths, Sir Eldon
McCurley, Mrs Anna


Griffiths, Peter (Portsm'th N)
Macfarlane, Neil


Grist, Ian
MacGregor, Rt Hon John


Ground, Patrick
MacKay, Andrew (Berkshire)


Grylls, Michael
MacKay, John (Argyll &amp; Bute)


Gummer, Rt Hon John S
Maclean, David John


Hamilton, Hon A. (Epsom)
McNair-Wilson, P. (New F'st)


Hampson, Dr Keith
McQuarrie, Albert


Hannam, John
Madel, David


Harris, David
Major, John


Harvey, Robert
Malins, Humfrey


Haselhurst, Alan
Malone, Gerald


Hawkins, C. (High Peak)
Maples, John


Hawkins, Sir Paul (N'folk SW)
Marland, Paul


Hawksley, Warren
Marlow, Antony


Hayes, J.
Marshall, Michael (Arundel)


Hayhoe, Rt Hon Barney
Mates, Michael


Hayward, Robert
Maude, Hon Francis


Heath, Rt Hon Edward
Mawhinney, Dr Brian


Heathcoat-Amory, David
Maxwell-Hyslop, Robin


Heddle, John
Mayhew, Sir Patrick


Henderson, Barry
Mellor, David


Hickmet, Richard
Merchant, Piers


Hicks, Robert
Meyer, Sir Anthony


Higgins, Rt Hon Terence L.
Miller, Hal (B'grove)


Hill, James
Mills, Iain (Meriden)


Hind, Kenneth
Miscampbell, Norman


Hirst, Michael
Mitchell, David (NW Hants)


Hogg, Hon Douglas (Gr'th'm)
Moate, Roger





Monro, Sir Hector
Speller, Tony


Montgomery, Sir Fergus
Spence, John


Moore, John
Spencer, Derek


Morrison, Hon C. (Devizes)
Spicer, Jim (W Dorset)


Morrison, Hon P. (Chester)
Spicer, Michael (Worcs S)


Moynihan, Hon C.
Squire, Robin


Mudd, David
Stanbrook, Ivor


Murphy, Christopher
Stanley, John


Neale, Gerrard
Steen, Anthony


Needham, Richard
Stern, Michael


Neubert, Michael
Stevens, Lewis (Nuneaton)


Newton, Tony
Stevens, Martin (Fulham)


Nicholls, Patrick
Stewart, Allan (Eastwood)


Norris, Steven
Stewart, Andrew (Sherwood)


Onslow, Cranley
Stewart, Ian (N Hertf'dshire)


Oppenheim, Phillip
Stokes, John


Oppenheim, Rt Hon Mrs S.
Stradling Thomas, Sir John


Osborn, Sir John
Sumberg, David


Ottaway, Richard
Tapsell, Sir Peter


Page, Sir John (Harrow W)
Taylor, John (Solihull)


Page, Richard (Herts SW)
Taylor, Teddy (S'end E)


Parkinson, Rt Hon Cecil
Tebbit, Rt Hon Norman


Parris, Matthew
Temple-Morris, Peter


Patten, Christopher (Bath)
Terlezki, Stefan


Patten, J. (Oxf W &amp; Abdgn)
Thomas, Rt Hon Peter


Pawsey, James
Thompson, Donald (Calder V)


Peacock, Mrs Elizabeth
Thompson, Patrick (N'ich N)


Pollock, Alexander
Thorne, Neil (Ilford S)


Porter, Barry
Thornton, Malcolm


Portillo, Michael
Thurnham, Peter


Powell, William (Corby)
Townend, John (Bridlington)


Powley, John
Townsend, Cyril D. (B'heath)


Prentice, Rt Hon Reg
Tracey, Richard


Prior, Rt Hon James
Trippier, David


Proctor, K. Harvey
Trotter, Neville


Pym, Rt Hon Francis
Twinn, Dr Ian


Raffan, Keith
van Straubenzee, Sir W.


Rathbone, Tim
Vaughan, Sir Gerard


Rees, Rt Hon Peter (Dover)
Waddington, David


Renton, Tim
Wakeham, Rt Hon John


Rhodes James, Robert
Waldegrave, Hon William


Rhys Williams, Sir Brandon
Walden, George


Ridley, Rt Hon Nicholas
Walker, Bill (T'side N)


Ridsdale, Sir Julian
Walker, Rt Hon P. (W'cester)


Rifkind, Malcolm
Wall, Sir Patrick


Rippon, Rt Hon Geoffrey
Waller, Gary


Roberts, Wyn (Conwy)
Walters, Dennis


Roe, Mrs Marion
Ward, John


Rossi, Sir Hugh
Wardle, C. (Bexhill)


Rost, Peter
Warren, Kenneth


Rowe, Andrew
Watson, John


Rumbold, Mrs Angela
Watts, John


Ryder, Richard
Wells, Sir John (Maidstone)


Sackville, Hon Thomas
Whitfield, John


Sainsbury, Hon Timothy
Whitney, Raymond


St. John-Stevas, Rt Hon N.
Wiggin, Jerry


Sayeed, Jonathan
Wilkinson, John


Shaw, Giles (Pudsey)
Winterton, Mrs Ann


Shaw, Sir Michael (Scarb')
Winterton, Nicholas


Shelton, William (Streatham)
Wolfson, Mark


Shepherd, Colin (Hereford)
Wood, Timothy


Shepherd, Richard (Aldridge)
Woodcock, Michael


Shersby, Michael
Yeo, Tim


Silvester, Fred
Young, Sir George (Acton)


Sims, Roger
Younger, Rt Hon George


Skeet, T. H. H.



Smith, Tim (Beaconsfield)
Tellers for the Noes:


Soames, Hon Nicholas
Mr. Carol Mather and


Speed, Keith
Mr. Robert Boscawen.

Question accordingly negatived.

Debate to be resumed tomorrow.

Orders of the Day — PETITION

British Steel

Mr. Tom Clarke: On behalf of my right hon. and learned Friend the Member for Monklands, East (Mr. Smith) and myself, I wish to present a petition which has been given to us by our constituents and others in response to the astonishing decision taken during the parliamentary recess by British Steel to announce the closure of Gartcosh works and indeed to confirm its lack of faith in the future of Ravenscraig by refusing adequate investment in that plant.
Our constituents, the people of Scotland generally and indeed many others who see the steel industry as being essential to our manufacturing base support the petition and the cause of Gartcosh and Ravenscraig:
Wherefore your petitioners pray that your honourable House do urge the Secretary of State for Trade and Industry and the chairman of the British Steel Corporation to reconsider the decision to close the BSC plant at Gartcosh and to make the necessary new investment to secure the long-term future of the Gartcosh-Ravenscraig complex.
And your petitioners, as in duty bound, will ever pray.

To lie upon the Table.

Orders of the Day — Darfield Main Colliery

Motion made, and Question proposed, That this House do now adjourn—[Mr. Peter Lloyd.]

Mr. Terry Patchett: May I express my gratitude for the opportunity to raise this matter on the Floor of the House? Although I am aware that Darfield Main colliery is the subject of the review procedure between the National Coal Board and the appropriate trade unions, there are certain aspects of which the Minister should be made aware.
Darfield Main is a mine with which I have had close associations for many years. Indeed, I was present at the negotiations when the Silkstone seam was added to the reserves of Darfield Main from Houghton Main, with assurances of at least 15 years of extended life. With the committed investment at Darfield Main of some £28 million, there opened up a potential of 1 million tonnes in the Winterbed seam where headings were already laid out. The 250,000 tonnes in the Melton Field seam took the potential life of Darfield Main to well over 20 years. However, those arguments will no doubt be put forward by the relevant trade unions in the review procedure.
Being experienced in negotiations with the NCB, I am aware of the Government's influence over the NCB. It is to that that I wish to draw the attention of the House. During the miners' dispute, which is generally accepted by political commentators as having been perpetrated on the country by the Government, I wrote to the Secretary of State about the future of Darfield Main.
Darfield Main's future lies with heavy investment in the Silkstone seam which connects to the Cortonwood reserves of the same seam. The then branch secretary of the union, Walter Swift, had written to me expressing concern about the future of Darfield Main in view of the fact, stated many times, that the NCB could not sell Cortonwood coal. We are all familiar with the history of Cortonwood.
I wrote to the Secretary of State and he passed my letter on to Mr. Ian MacGregor, chairman of the National Coal Board. I expressed concern about the future of Darfield Main and Houghton Main collieries, which mine the same seam. In response, Mr. MacGregor assured me—he was writing during the strike—that
Darfield Main and Holton Main collieries have substantial reserves, and, unlike Cortonwood, produce coal from other seams as well as the Silkstone.
These two pits are part of the south side washery complex, centred on Grimethorpe colliery and they have benefited substantially over recent years from the board's massive programme of capital investment under plan for coal. Both pits now have a complete new underground infrastructure, with streamlined operations for men, material and mineral handling, at low cost.
The coal mined from these collieries (including that from the Silkstone seam) will form part of a comprehensive blend to produce a low cost product, suitable for both industry and power stations.
That letter was written during a different climate, but given Mr. MacGregor's assurance one can readily understand my amazement when a proposal to close Darfield Main was announced within only four or five weeks of the end of the dispute, after such a glowing reference. I am aware of the dirty tactics used by the board and the Government during the dispute, which misled


public opinion so gravely, but an attempt to mislead a Member of the House in such a way by the chairman of a nationalised industry is intolerable behaviour.
When I heard of the proposed closure, I immediately wrote to Mr. MacGregor requesting a meeting to discuss the matter. I was entitled to do so following the assurances that I received during the dispute. He replied by saying that his office was arranging for me to meet the area director of Barnsley area, Mr. Frank Ramsden, so that the present position could be explained, although it was Mr. MacGregor who sent the initial letter. I immediately contacted Mr. Ramsden's office by telephone. I have known Frank Ramsden personally for many years. However, his secretary told me that he was out that day and going on holiday the following day. I made that contact on my initiative—nothing came from the coal board, regardless of promises.
That happened in the middle of July. From that time to this there has been no attempt to contact me by letter or telephone. In fact, that part of the Barnsley area of the NCB no longer exists as it is now under the auspices of the north Yorkshire area director, Mr. Albert Tuke, who has not contacted me either.
I feel strongly that I have been treated with contempt by the chairman of a nationalised industry. Anyone treating a Member of the House in such a contemptuous manner is treating the House itself with contempt. I am satisfied in my own mind that Mr. MacGregor feels that he does not have to justify writing off £28 million of public money to a duly elected Member of the House. I wish to take up that line of thought with the Minister because I feel strongly that that attitude has been encouraged by the Government. The Government have been and are prepared to write off many millions, indeed billions, of pounds during the dispute, to pursue their political dogma. Had the Government been prepared to spend half as much money in creating markets for coal as they have spent in union bashing, I am sure that the NCB would be in a much sounder position today.
I also regret that the Government's arrogance has infiltrated local management. Indeed, Mr. Griffin, the manager of Houghton Main, makes repeated calls to the work force for co-operation, but that is only in public. The work force are members of the National Union of Mineworkers. Away from the public eye, Mr Griffin tells union officials that he is looking for a way to sack them—that is the branch officials, of course. What a way to run an industry.
To return to the major reason for bringing this matter to the attention of the House, I feel that the NCB is in a dilemma because the Government have no clearly defined energy policy. Is it not ironic that the coal board is turning down coking coal export orders to the tune of 2 million to 3 million tonnes to Rumania and a possible 3 million tonnes, going up to 1990, from Denmark; and I am reliably informed of Irish interests preferring British coal to American. I am speaking of coking coal which is the backbone of the Darfield Main colliery—the coking coal that the board could not sell from Cortonwood when it started this trouble.
It is to this dilemma that the Government contribute. For example, the main argument which contributed to the costly mining dispute concerned reserves. Since the strike, this has turned into a question of economics, meaning that

even a pit with reserves has no guaranteed future. Darfield Main, with its 20 years' reserves, was set an economic target of £42 per tonne. It had almost achieved that aim and was suddenly told, "You cannot score goals. We are moving the net. We are dropping it to £38 per tonne." It is a ridiculous way to run a business.
I must ask the Minister to come clean on the Goverment's policy for the energy industry. It really is time that he did so. I feel confident that the Government do not have too much of an interest in the electricity generating industry for sales because of their obvious enthusiasm for nuclear energy. It seems clear that the recent reorganisation of the coal board areas is leading up to a sale of lucrative pits such as Selby and the Vale of Belvoir, with its thick seams, not necessarily with a view to competing in the electricity generating industry but with an eye to the potential market in the gas industry. It is quite well known that by the year 2010 the gas board will require as much as 100 million tonnes of coal for conversion purposes when those wasted assets in the North sea have gone, when the Goverment have done with the easy meat.
I ask the Minister, therefore, to give a direction to the board, indeed to the country, by declaring quite clearly and specifically their energy policy. It cannot be so difficult a task when we realise that 2010 is only 25 years away. Until the Minister comes clean on this, the work force will always face the dilemma of not knowing where its future lies. Like Darfield Main, many more pits will face apparently desperate searches for reasons to close them. The reasons vary from week to week. One used to be worked-out reserves. Now it is economics. This is what the coal board is now indulging in. It cannot even find a genuine reason for closing pits.
I ask the Minister to do his duty to the country by spelling out his policy honestly and clearly. We want to know how many more millions of pounds the Government are prepared to write off and how much more of the coal industry will be destroyed before the Government's targets are satisfied.

The Parliamentary Under-Secretary of State for Energy (Mr. David Hunt): I acknowledge that there can be few Members of the House better qualified to speak on this subject than the hon. Member for Barnsley, East (Mr. Patchett), with his background as a craftsman at Houghton Main and as a long-standing delegate for the National Union of Mineworkers. I fully appreciate the concerns which have led him to raise this matter tonight.
Colliery closures, particularly in areas of high unemployment, must be of concern to us all. I have pointed out to the House on many occasions that the closure of individual pits is a matter for the National Coal Board in consultation with the unions. I know only too well from experience in my constituency on Merseyside the problems that are caused by high levels of unemployment. However, the hon. Gentleman has not chosen a particularly appropriate occasion to raise this matter for the first time in the House.
The area director of what was at that time the NCB's Barnsley area first proposed the closure of Darfield Main, as the hon. Gentleman knows, at a general colliery review meeting on 16 May of this year, after the strike. Under the terms of the colliery review procedure, a reconvened


colliery review meeting was held on 20 June, when the unions indicated their wish to appeal against the proposal. That appeal was heard on 7 November, last week.
As always, the NCB has assured me that it will give serious consideration to the case that has been put forward by the unions. I understand that all three major unions—the NUM, NACODS and BACM—have appealed on this occasion. The House would not want the NCB to make a quick decision on a closure which will affect about 600 of the board's employees living in or around the hon. Gentleman's constituency. I understand that a full meeting of the NCB is expected to consider the unions' appeal at a meeting on 6 December.
The hon. Gentleman made a number of allegations, of which I had no prior notice, against the NCB and its chairman—and I mean no criticism of him for that—but the specific details of assurances given by the chairman must be a matter for the hon. Gentleman to take up with the chairman direct. [Interruption.] Naturally, I shall bring the hon. Gentleman's remarks immediately to the attention of the chairman of the NCB, but on this matter I know that the director, Albert Tuke, has every confidence in his relationship with local Members, and I hope that the hon. Gentleman has a sufficiently good relationship with Mr. Tuke to be able to approach him direct on these crucial matters.
The hon. Gentleman will be aware that for some months the NCB and the mining unions have been discussing the implementation of the modified colliery review procedure. Following a meeting on 30 October, that procedure is at last in place. Should last week's appeal prove unsuccessful, the unions will have the option to take their case to the new final stage of the procedure. For the first time, this provides an independent element in the consideration of proposed pit closures in that a panel of eminent barristers sitting alone in rotation will consider the views of both sides of the industry and make a completely impartial recommendation.

Mr. Geoffrey Lofthouse: Does the Minister agree that there is evidence that since the end of the strike the pit closure programme has become more rapid than before the strike appeared to be the intention? For example, in my constituency pits such as Ackton Hall and Fryston have been closed when they were originally not on the hit list. Millions of pounds had been invested in them. Indeed, at Ackton Hall just prior to the strike a brand new office block complete with canteen as built. Is it now a case of the victor taking the spoils? In other words, will the industry be run down more quickly because one side thinks it won the strike?

Mr. Hunt: I shall be responding to that question in the context of replying to the general points that have been made.
As the question of the possible closure of Darfield Main is still only at the stage of being considered by the board, and should the appeal prove unsuccessful it has the further stage of the independent review body still before it, it would not be right or proper for me to comment in detail tonight on the pit itself. It would be wrong for me to interfere in the process that I have described. It is a matter for the mining unions to discuss with the NCB direct.
I shall, however, respond to the more general remarks about the coal industry. I start by reminding the House of our commitment to the coal industry and the massive

support that we have given in the last six years, support which, despite the longest and most damaging industrial dispute the nation has ever seen, has enabled the miners to remain as some of the highest paid in the industrial pay league. That support has ensured that during the massive and long-overdue restructuring that is now taking place no man has been forced to leave the industry, and those who have chosen to leave have done so on the most extraordinarily generous terms. Government support has led to the creation of National Coal Board Enterprise Limited, which not only brings new industry into mining areas but gives men who worked in the coal milling industry a fresh start to use their redundancy money in creative and imaginative ways.

Mr. William O'Brien: Will the Minister tell the House what the Government and the coal board are doing to follow up and develop markets for the sale of British coal? This question was raised by my hon. Friend the Member for Barnsley, East (Mr. Patchett). What are the Government and the NCB doing to win the overseas markets which many of us are convinced are available'?

Mr. Hunt: When the Government came to office in 1979, Britain was a net importer of coal. In the period just before the strike we had become a net exporter of coal. That does not square with the hon. Gentleman's remarks. I am trying to avoid responding to party political points because this is not the time to rehearse the old political arguments about the strike. However, because of the politically damaging dispute, we have again become a net importer of coal. I share the hon. Member's and the House's resolve to recapture the markets for coal, but it will be impossible to do so if coal is uncompetitively priced.

Mr. Alec Woodall: It is all very well for the Minister to talk about political response. Is he aware of the colliery just two miles from my home with which the Government have had many dealings? Kinsley Drift colliery has been open for only five years and is now on the hit list to be closed. That five-year-old colliery broke records when it opened, despite the fact that it began with a fatal accident in which two men were killed. It is a brand-new pit which is now on the hit list after only five years, despite the Government's commitment. What chance have the older pits that were sunk a century ago and have been working ever since if a pit that is only five years old is on the hit list because the capital charges placed on it by the Government have forced it to close for economic reasons?

Mr. Hunt: Any proposal for a pit closure must go through the review procedure. There is now every opportunity for the unions, if they wish to oppose the closure, not only to go through the old procedure stage by stage but to involve the independent element. The best place to argue about the future of a pit is within the procedures laid down in consultation with the NCB and the mining unions, not in the Chamber.
My remarks about National Coal Board Enterprise Ltd. are in no way intended to establish that the Government have an immediate answer to the problems of mining communities facing pit closures. However, it has made an impressive start. In its first year of operation, the company has created 2,700 jobs and has given direct assistance to 188 projects in the service and manufacturing industries. It has taken over disused NCB properties and created


managed workshops where people are going into business for the first time. They have access to shared services and a wealth of advice and guidance on financial, administrative and marketing problems. In addition, the company is working closely with new and existing enterprise agencies, and is providing funds to the tune of £750,000 a year. Staff are being seconded to those agencies from the National Coal Board.

Mr. Dennis Canavan: How many jobs have been destroyed in the mining industry since the Tory Government took power?

Mr. Hunt: The direct answer to the hon. Gentleman's question is that the Government have no part in destroying jobs in the mining industry—

Mr. Canavan: Answer the question.

Mr. Hunt: The direct answer is that the Government have no part in destroying jobs in the mining industry.

Mr. Canavan: It is a simple question; answer it.

Mr. Hunt: The Government are in the business of providing a positive future for coal by putting record investment into establishing—

Mr. Canavan: How many jobs have been destroyed in the mining industry since the Tory Government took power?

Mr. Hunt: I am saying that the Government have destroyed no jobs in the coal industry. I cannot give the hon. Gentleman a more direct answer than that. But, of course, he will never be satisfied, because it does not accord with his political views, which paint me as someone who is trying to decimate the coal industry. On the contrary, the Government have a positive attitude to the future of coal. Of course, there will be difficulties, but I believe that those difficulties can be overcome. Provided that we can regain confidence in coal, it has a tremendous future in Britain.

Mr. Andy Stewart: Cannot the answer to getting cheaper coal be found in my constituency, where week after week miners are breaking production records?

Mr. Hunt: My hon. Friend paints the correct picture. I have been underground at six pits in the past few months, and I have discovered at the coal face a determination to make coal a competitive fuel. The hon. Member for Barnsley, East asked me about the Government's energy policy. It is simple. We are proud and fortunate to have all the main sources of energy: oil, gas, nuclear fuel and coal. Our energy policy is to keep each option active and developing, none more so than coal. There is a positive future for coal.

Mr. Allen McKay: The Minister believes that to be a positive attitude, but why is Darfield Main to be closed when it conforms with the board's criteria on breaking even, which is that it should cost less than £39 a tonne to produce coal?

Mr. Hunt: I can readily answer the hon. Gentleman. There is no solution to unemployment in keeping open pits that cannot produce coal in a manner beneficial to the industry or to the nation. I do not prejudge Darfield Main, because its proposed closure is still going through the

review procedure. It is for the coal board and the mining unions, in consultation, to determine the future of the pit. But the support of grossly uneconomic capacity has cost the taxpayer enormous sums of money in recent years. The Government refuse any longer to draw a blank cheque in support of the industry on the taxpayer. Of course, the NCB must put its house in order. To do that, and to be able to face the future as a healthy and competitive industry, it is vital that it should close capacity which cannot make a positive contribution.

Mr. Eddie Loyden: The Minister has talked many times about his concern for the unemployed in my region, with which he is closely associated, and he will be aware of the closure of mines in his constituency. What is his view of the Lancashire mines? He has argued vociferously in the House about unemployment in the area that he represents. He does he square that with the closure of mines in Lancashire?

Mr. Hunt: It is clear that the Government want a viable, economic coal industry. With the majority of investment going into existing rather than new pits, the industry has every opportunity to prove itself and individual pits have the chance to reach productivity targets.
We must not lose sight of the subject of this debate. The hon. Member for Barnsley, East cannot argue, as he conceded, that the remaining reserves at Darfield Main will be lost. I understand that they are easily accessible from the neighbouring colliery, and that all those currently employed at Darfield Main will be given the opportunity to remain in the industry if they wish, or to leave on generous redundancy terms. If there are other technical or economic arguments against closure, the proper place to air them is in the colliery review procedure.

Mr. Patchett: Is the Minister aware, when he talks about accessibility to neighbouring pits, that I have worked in the same seam and am quite familiar with it? The neighbouring seam is Houghton Main Colliery. Economic difficulties arise because of the distance men have to travel from the pit bottom to the seam. Darfield Main is closer to the pit bottom and fewer man hours are therefore required.

Mr. Hunt: I am helpless when the hon. Gentleman makes such points because, as I have acknowledged, he knows the area better than any other hon. Member. I have listened carefully to him and I am sure that what he has said will be taken into account in the procedure.

Mr. Woodall: It is all very well for the Minister to talk about a healthy, viable coal industry but is he aware that in Yorkshire alone, since the strike ended in April, 18,500 men have been made redundant? Viability is now so bad that every man at every pit in my area is talking about the future and the lid going on that pit. I can tell the Minister of a brand new pit—it is only five years old—which is now in danger under the review procedure. What about the other pits? It is all very well to talk about viability, but who decides what is viable?
The break-even point started at £42 a tonne and is now down to £38 a tonne. How long will it be before it is £36 a tonne and most pits are in danger?

Mr. Hunt: The hon. Gentleman has begun to answer his own question. The viability of these pits depends upon their ability to produce coal at a competitive price. The


redundancies he has spoken about are voluntary under this Government. Often under Labour, they were compulsory. Under this Government there is an enterprise company ready to breath new life into declining areas. Under Labour, there was no enterprise company.

Mr. Lofthouse: I am sure that the Minister is not deliberately misleading the House when he speaks about redundancies under the Labour Government. I was

involved in the NCB's administration of pit closures under the Labour Government, when the NCB did not make men compulsorily redundant.

Mr. Hunt: rose—

The Question having been proposed after Ten o'clock on Monday evening, and the debate having continued for half an hour, MR. SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at thirteen minutes to Eleven o'clock.